Preamble

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — NATIONAL WAR EFFORT

Hospitals (Nursing and Domestic Staffs)

Mr. Foster: asked the Minister of Labour what representations he has received of the serious shortage of nursing and domestic staffs in infectious diseases hospitals; and whether he has had any consultations with the Minister of Health with the view of remedying the position?

The Minister of Labour (Mr. Ernest Bevin): I am fully aware of the serious shortage of nursing and domestic staffs in certain hospitals, including hospitals for infectious diseases, and I have discussed the position with my right hon. Friend the Minister of Health. Local appointments officers of my Department are already reviewing the position of nurses and midwives who registered on l0th April under the Nurses and Midwives (Registration for Employment) Order, 1943, and in placing available women, priority is being given to vacancies in those hospitals, including hospitals for infectious diseases, where the shortage is most acute. As regards domestic staff, I would refer my hon. Friend to the reply which I gave to the hon. Member for East Islington (Mrs. Cazalet Keir) on 13th May, of which I am sending him a copy.

Transferred Women, England and Wales

Professor Gruffydd: asked the Minister of Labour how many men and women, respectively, have been transferred from Wales to England, and from England to Wales, by direction of his Ministry?

Mr. Bevin: The number of women transferred from Wales to employment in England after registration under the Registration for Employment Order and the National Service Acts was 1,455 up to 1st June, 1943, from 16th June, 1942, on which date my Department started to keep records in this connection. In the same period 114 women went from England to work in Wales.

Professor Gruffydd: In view of the effect of these transfers on the life of Welsh towns, will the right hon. Gentleman see that only voluntary transfers are made in future?

Mr. Bevin: I am afraid I cannot accept that.

Dog Trainer

Major Sir Jocelyn Lucas: asked the Minister of Labour whether his attention has been drawn to the remarks on 27th May of Sir Gervais Rentoul when convicting a dog trainer of the international circus for cruelty; and whether he will direct the man concerned to work connected with the war effort?

Mr. Bevin: I am having inquiries made into this case and will communicate with my hon. and gallant Friend.

Ex-Cotton Workers

Mr. Tinker: asked the Minister of Labour whether he is aware that many persons had to seek other employment when cotton mills went on short time or closed down; that they are being recalled now and some are objecting to it and wish to remain at their present work; and whether full consideration is given to them?

Mr. Bevin: Yes, Sir. Owing to the urgent need for experienced workers in some sections of the cotton industry, I am asking ex-cotton workers, including some engaged in munitions production, to return to their former employment. Where workers are transferred compulsorily to cotton by direction under Regulation 58A the normal procedure of appeal to a local appeal board against the direction is available.

Mr. Tinker: Are there any further efforts they can make if the appeal board rejects their appeal?

Mr. Bevin: No, Sir.

Mr. Tinker: Will my right hon. Friend have some regard to the conditions obtaining in the cotton industry, and could not efforts be made to make the cotton workers' position a little better than it is at the present time, because they are being driven back to conditions they did not like from positions where they have been getting better wages?

Mr. Bevin: I have to follow the rate for the job, and wages in the cotton trade have been arranged with the cotton


Union, and I am happy to say that there have been material improvements made in the cotton trade during the war.

Accountants' Staffs

Major Sir Adrian Baillie: asked the Minister of Labour whether he is aware that, because of the withdrawal of members of the staffs of professional accountants' offices, apprehension and unrest are being caused among members of the public who are unable to obtain the skilled advice and assistance they require in connection with their tax affairs; and will he state the number of women within the scope of the National Service Acts who are at present employed in the offices of the Inland Revenue in connection with the administration and collection of Income Tax, Excess Profits Tax, National Defence Contribution and War Damage Contribution?

Mr. Bevin: I have had no evidence that apprehension and unrest are being caused among members of the public owing to the withdrawal of staff from accountants' offices. Deferment of calling-up has been granted to a very considerable number of accountants and male members of their staffs who are liable for military service, and men over military age are not being withdrawn from the profession. Deferment is not normally granted in the case of women who are liable under the National Service Acts, but other women possessing special qualifications are not being withdrawn. The second part of the Question should be addressed to my right hon. Friend the Chancellor of the Exchequer.

Sir A. Baillie: In regard to the reply to the first part of my Question, is it not a fact that in certain cases arrangements were made that essential members of professional accountancy staffs would not, in fact, be called up unless suitable substitutes could be found, and is the right hon. Gentleman aware that in the cases which I brought to the attention of the Ministry such substitutes were not found and considerable hardship is being caused to my constituents?

Mr. Bevin: I am advised on this matter with regard to accountants by a headquarters committee, who go into the thing very carefully. I cannot guarantee prior substitution in every case, and I take this occasion to say that I am afraid that prior substitution will have to go very shortly

altogether, because when I send substitutes people want to keep their own staffs, and they make it difficult to take on the substitutes.

Sir A. Baillie: Is the Minister aware that in certain cases such a guarantee was given?

Mr. Bevin: I should want notice of that question.

Colonel Sir A. Lambert Ward: Is it to be understood that professional chartered accountants are exempt from military service at all ages?

Mr. Bevin: Oh no, Sir.

Workers' War Record

Mr. Ellis Smith: asked the Minister of Labour whether it is intended to publish a book containing the war record of the Ministry of Labour, an account of the achievements of industry in organising and utilising man- and woman-power and the contribution made by the organised workpeople in the workshops in the training of workers; if so, when will it be published; and will he see that a large sale is organised and that copies be sent to all military units and to all His Majesty's ships?

Mr. Bevin: A book on the mobilization of the man- and woman-power of this country has been written and is now with the printers. Publication and distributional arrangements are in the hands of my right hon. Friend the Minister of Information.

Mr. Smith: Will my right hon. Friend convey this suggestion to the Minister of Information with a view to getting as large a sale as possible organised, and will he also see that the suggestion in the Question that copies should be broadcast to all people serving in His Majesty's Forces is carried out?

Mr. Bevin: I will bear that in mind.

Sir Herbert Williams: Does the right hon. Gentleman think that there will be enough paper to supply everybody with a copy?

Mr. Smith: Will my right hon. Friend bear in mind that the achievements of the workers in this war are such that they should be made known, and would not paper be well used on a publication of this character?

Major-General Sir Alfred Knox: Will the Minister see that this book gives some recognition to the work of industrialists, who have not been referred to at all?

POST-WAR OVERSEAS POLICING

Major Nield: asked the Minister of Labour whether he will forthwith call for volunteers to form the Armed Forces or part of those Forces necessary for the occupation or policing of such areas overseas as may have to be occupied or policed after the war, in order to release naval, military and Air Force personnel who have served abroad either to return home or to civilian employment as soon as possible?

Mr. Bevin: I would refer my hon. and gallant Friend to the reply given to him by the Secretary of State for War on 1st June and to the reply which I gave to the hon. Member for Swindon (Mr. Wakefield) on 20th May, of which I am sending him a copy.

MILITARY SERVICE (CINEMA TECHNICIANS)

Mr. Sorensen: asked the Minister of Labour whether, in considering applications for postponement or deferment of military service, technicians engaged in cinema production have their specialist work fully taken into consideration; whether interested Government Departments are consulted in the matter; and whether the advice of these Departments is taken, particularly respecting the avoidance of handicaps to production?

Mr. Bevin: Applications for the deferment of calling-up of men engaged in film production are referred to an independent Advisory Committee which gives careful consideration to their specialist work. Interested Government Departments are afforded the opportunity of making representations to this Committee, and due weight is given to their advice on all matters affecting production.

Mr. Sorensen: May I ask my right hon. Friend whether the appropriate trade union is taken fully into consultation?

Mr. Bevin: The Department is in the habit of consulting everybody who asks to be consulted.

ARMED FORCES (PENSIONS AND GRANTS)

Mr. Willink: asked the Minister of Pensions whether he is aware that, under the present provisions for pensions and allowances for the widows and children of deceased members of His Majesty's Forces, these dependants may be reduced on the termination of war service grant, especially in areas where rents are high, to a standard of living far below that deemed proper during the life of the deceased man; and whether he will consider as an urgent matter the application of the minimum unit standard of 18s. in such cases?

The Minister of Pensions (Sir Walter Womersley): The question raised by my hon. and learned Friend is among the matters which I am examining following the Debate in this House on 23rd March last.

Mr. Willink: Is the right hon. Gentleman not prepared to say that it is an urgent matter to ensure that these widows, who may be bearing another child or may be bringing up a number of children and may be quite unable to work, are assured of a minimum standard?

Sir W. Womersley: This and many other matters mentioned in the Debate are indeed matters of importance. I am doing my best to get down to the consideration of all of them so that I can make a comprehensive statement to the House.

Mr. Willink: My right hon. Friend says that it is a matter of importance; is he not prepared to say it is a matter of urgency?

Captain Cobb: In view of the fact that a war service grant is given to a wife in order to bring her up to a minimum level of subsistence, will my right hon. Friend inquire into the reasons why, as soon as a wife becomes a widow, her pension automatically reduces her income below the Minister's own standard of minimum subsistence?

Sir W. Womersley: My hon. and gallant Friend is behind the times; I am considering that and have been doing so for some time.

Mr. Willink: Does not the present position leave these women below the standard which will be achieved for civilian widows under the Pensions and Determination of Needs Bill?

Sir W. Womersley: I am considering that too.

Mr. Willink: asked the Minister of Pensions whether he will consider the introduction of the principle of ante-natal allowances in the case of posthumous births on the lines already applied by the Service Departments in the case of births during the father's life?

Sir W. Womersley: I am glad to have the opportunity of stating that from the outset of the scheme my Department has paid a pre-natal allowance to a widow in receipt of a pension in any case where the pre-natal allowance period began after the termination of the period for which pay and allowances are continued by the Service Departments. Payment is made by the Service Departments in any case where the pre-natal allowance period begins whilst Service pay and allowances are still in issue.

Mr. Willink: Can my right hon. Friend say why, as many months have elapsed since the Services adopted this principle, his Department have not announced their adoption of the principle?

Sir W. Womersley: We have put it into operation, which is better than announcing it.

Mr. Bellenger: Does this also include an unmarried dependant?

Sir W. Womersley: I should want notice of that question.

Major Lyons: asked the Minister of Pensions the maximum amount of pension now awardable to a parent, or to parents, respectively, in respect of the death on active service of a private soldier son in respect of whom dependency is established; and the date of the Warrant fixing these amounts?

Sir W. Womersley: Under the Royal Warrant of 12th January, 1943, the maximum pension awardable to one parent is 16s. 6d. and to two parents 19s.

Major Lyons: Arising out of this disclosure, does my right hon. Friend think these meagre figures are in any way related to the reasonable considerations of compensation for dependency? Will he not merely consider the matter but take steps to put an end to this shocking rate of pension?

Sir W. Womersley: This is also a matter which is being fully considered by my Advisory Committee.

Mr. Lawson:: is the Minister considering the parents' pension——

Sir Granville Gibson: On a point of Order, Mr. Speaker. Could you make an appeal to Members to speak up instead of whispering?

Mr. Lawson: Is the Minister also reviewing the case of a mother whose son has been making an allotment but now receives no pension at all?

Sir W. Womersley: I am reviewing the whole position as regards parents.

Major Lyons: Does not my right hon. Friend think that the time has gone by for consideration and that the time has now come for some action?

Sir W. Womersley: During the recent Debate 14 propositions were put to me by Members who regarded them as being equally as important as the question which my hon. and gallant Friend has just put to me. I have already stated that it would be far better that I should come forward with a comprehensive scheme dealing with all these matters.

Major Leighton: When will my right hon. Friend be in a position to make an announcement?

Mr. Gallacher: This year, next year?

Sir W. Womersley: I do not take the hon. Member's example. I will make an announcement as soon as it is possible to do so.

Mr. Moelwyn Hughes: asked the Minister of Pensions whether he is aware of the case of the late Lieutenant E. McPherson, Royal Naval Reserve; that this officer was twice torpedoed and then developed a nervous condition due to the torpedoing and later a disability which proved fatal; that his widow and orphans are entirely without means; and will he reconsider his refusal to grant a Service pension?

Sir W. Womersley: As I have explained to the hon. Member, Mr. McPherson's death was due to a malignant disease of the abdomen which I am advised was neither caused nor influenced in its pro-


gress by the officer's war experiences. In these circumstances, I regret, therefore, that a pension cannot be awarded to Mrs. McPherson.

Mr. Hughes: Can the right hon. Gentleman really justify that statement to this House after the advice which has been given to him, namely, that this man's death was completely unconnected with the Service, seeing that he was twice torpedoed, that he was subjected to an operation under Service conditions, and that he was, in fact, accepted as A.I when he went into the Navy?

Sir W. Womersley: This is a case of cancer. I have consulted my medical advisers and other medical experts, not merely on this particular case, but on the general question of this disease, many times. The advice given to me is that this officer's death cannot be ascribed to war service. Mrs. McPherson will have an opportunity now of presenting her case to an appeal tribunal, and we shall get a decision from someone outside the Ministry.

Mr. Hughes: In the meantime will not the Minister temporarily reconsider his decision, because the widow and children are now completely dependent upon charity?

Mr. Gallacher: Answer!

Sir W. Womersley: The hon. Membér is a little impatient. He asked me to answer when I was getting up to do so. I am always courteous to the House, and I hope Members will be courteous to me. In reply to the hon. Member for Carmarthen (Mr. Hughes), I will go carefully into this matter, but I must repeat that the advice which has been given to me up to now is that deaths from cancer have nothing to do with war service.

Sir Percy Harris: Will the Minister reconsider the whole question of cancer, because it is constantly used as an excuse and a reason for escaping liability by the Ministry?

Sir W. Womersley: We shall have an opportunity shortly, now that tribunals are set up, of having this matter determined outside my Department or my advisers. In the meantime I will see what can possibly be done in this case.

Mr. A. Edwards: Is the Minister not aware that the country is becoming impatient about cases similar to this where something is done only after pressure? There is a deep-rooted impression that, the men in the Minister's Department are using their skill and ingenuity to cheat these men.

Sir W. Womersley: I have travelled widely and extensively, interviewing war pensions committees and branches of the British Legion throughout the country—I have just returned from an extensive tour of Scotland—and I do not agree at all with the view that has been expressed by the hon. Member.

Mr. Dobbie: asked the Minister of Pensions whether he can inform the House as to the number of cases of members of the Forces, who have been discharged from the Forces owing to disability, who have made application for pensions and whose claim has been rejected; and what percentage of such rejection have been psycho-neurosis cases?

Sir W. Womersley: I regret that it would not be in the public interest to give the figures asked for in the first part of the Question. As regards the second part, the percentage is about 17.

Mr. Oldfield: asked the Minister of Pensions the number of meetings held by his Central Advisory Committee during 1943; and the matters submitted to the Committee for their advice?

Sir W. Womersley: The Committee have held three meetings, and in addition there were three meetings of a subcommittee. The following matters have been put before them for consideration:

Pensions Appeal Tribunals and related issues;

Position of widows on cessation of service allowances and War Service Grants;

Parents' Pensions;

Personal Injuries (Civilians) Scheme.

Mr. Oldfield: asked the Minister of Pensions whether he will consider the granting of family allowances to disabled ex-Service men who marry, after becoming disabled, in cases where there is definite proof that a contract to marry


was entered into before the date of disablement?

Sir W. Womersley: The granting of family allowances to disabled men who marry after receipt of their disability is a matter which I have already promised to bring before my Central Advisory Committee.

Mr. Oldfield: asked the Minister of Pensions whether he has yet any announcement to make with regard to improvements to the Royal Warrant for Pensions as a result of the views expressed and representations made to him?

Sir W. Womersley: No, Sir, I have not yet completed my consideration of all the various matters affecting the Royal Warrant which have been represented to me.

Mr. Oldfield: When shall we have some definite assurances?

Sir W. Womersley: In addition to the matters brought forward in the Debate and representations which have been made to me from various organisations representing ex-Service men, I have received a suggestion from the British Legion in Scotland which is of a fundamental and drastic nature, and I felt it my duty to consider that suggestion along with the others before making a clear statement to this House. I have been to Scotland for interviews, and I am going on with my investigation.

Mr. Bowles: Would not the Minister consider working on the principle of "Fit for service, fit for pension"?

Mr. Bellenger: In view of the fundamental changes in the administration of the Pensions Warrant suggested by the British Legion in Scotland, does the Minister intend to hold up his proposals until he has given complete consideration to their views?

Sir W. Womersley: It is not a question of administration. The suggestions made by the British Legion in Scotland deal with a principle which goes to the root of the matter, and I feel that I ought to give it due consideration before making a statement.

Mr. Bowles: Will the Minister answer my question?

INDIA

Armed Forces (Income Tax)

Mr. Fraser: asked the Secretary of State for India the rate per £1 of income levied for Income-Tax purpose on members of His Majesty's Forces serving in India; whethere there is a personal allowance relieved of tax and, if so, what is it; and why reliefs are not given in respect of family commitments?

The Secretary of State for India (Mr. Amery): Members of His Majesty's Forces serving in India are assessable, in the same way as other persons, to tax under the Indian Income-tax Act. Incomes to £112 10s. are exempt. Those above that level are taxed on a sliding scale. For example, an income of £300 would in effect be taxed at 11¾rid. in the £, and one of £1,200 as 2s. 9½. in the £ There is no personal allowances as such, but in the case of total incomes exceeding £150 the first 1£112 10s. is not subject to tax. As regards the last part of the Question, the power to legislate on these matters rests with the Indian Legislature.

Mr. Fraser: Does not the right hon. Gentleman agree that the principle of family and married reliefs is a very good one, and will he represent those views to the appropriate authorities in India in view of the dissatisfaction on the part of our men there?

Mr. Amery: It is not a question of my agreement. It is a question for the Indian Legislature.

Mr. McEntee: Is the right hon. Gentleman not aware that many of these men serving in India are in fact so badly off that there is no comparison with men of equal rank serving at home, and will he not make an allowance to the Indian Army people which will enable them to pay the high rate of tax that they are now paying?

Mr. Amery: In most cases officers and N.C.O.'s in India are better off, but in the case of some senior N.C.O.'s and junior officers with large families, they are liable to Indian Income Tax when they would not be liable to tax here. It is not possible to reconcile those anomalies.

Mr. Granville: Is it not the case that there are certain officers serving in the


Forces in India who pay double Income Tax—in India and in this country?

Mr. Amery: That question would more properly be addressed to the Chancellor of the Exchequer. It depends, I imagine, on whether they have private incomes in this country.

Food Situation

Mr. Sloan: asked the Secretary of State for India whether he will make a further statement respecting the food situation in India; whether the prices of primary foods are still 10 and more times their pre-war level; whether rice is in substantially greater supply; and what further steps have been taken to meet the shortage of foodstuffs?

Mr. Amery: The latest reports from India are that the wheat just reaped is a bumper crop, and the other spring crops are good. The crop is moving slowly to the market and prices are still high. The rice situation still causes anxiety and must continue to do so so long as the Burma crop is lost to us. The chief concern at present is for Bengal and especially Calcutta, where the price of rice is shown as more than eight times pre-war, though this is not true of India generally. The Government of India have taken into their own charge the adjustment of supplies between surplus and deficiency areas throughout the country, divided into six regions, each under a Central Government Commissioner, and each comprising several "food provinces."

Mr. Sloan: As the position is alarming, and famine conditions in many areas are very acute, will the right hon. Gentleman undertake to see that all possible steps are taken to provide food for these people?

Mr. Amery: The Government of India are doing all in their power.

Sir A. Knox: Are not some middlemen hoarding large quantities of rice and grain?

Mr. Amery: Yes, probably hoarding is at the bottom of the difficulty.

Mr. Sorensen: Are steps being taken to control prices?

Mr. Amery: The control of prices is very difficult in India.

Mr. Sloan: Surely something can be done to bring the price down from the level of 10 times more than it was before the war.

Mr. Amery: Every attempt is being made to bring it down.

Indians, South Africa

Mr. Sorensen: asked the Secretary of State for India whether he has any information as to the result of the representations made by the Indian Government to the South African Government regarding the Trading and Occupation of Land Restriction Bill and the restrictions this imposes on Indian nationals; and whether any modification has been accepted by the South African Government?

Mr. Amery: I understand that the Bill referred to passed into law on 28th April on the lines originally proposed. It is a temporary Measure, for three years only, and the Union Government announced in connection with it their intention to set up immediately a commission, under a high judicial authority, on which Indians would be invited to serve, to inquire into matters affecting the Indian community in Natal and make recommendations. The persons described by the hon. Member as Indian nationals are for the most part South African nationals of Indian origin.

Mr. Sorensen: Are the Indian Government satisfied with the situation; is this a committee on which certain Indians may sit, and are these Indians Indian nationals or Indian citizens of South Africa?

Mr. Amery: They are South African nationals, as I have pointed out in my answer.

INDUSTRIAL FIRE BRIGADES (UNIFORM)

Captain Strickland: asked the Secretary of State for the Home Department the result of his consultation with the Minister of Production with regard to the issue to members of industrial fire brigades of suitable uniform clothing and boots on the same terms as are already given to members of the National Fire Service; and, if not, when it is likely that a decision will be made?

The Secretary of State for the Home Department (Mr. Herbert Morrison): I


regret that I am not yet in a position to add anything to the reply given to my hon. and gallant Friend on 17th March last. My right hon. Friend the Minister of Production has been giving very full consideration to the whole question of uniform supplies, but, as my hon. and gallant Friend will realise, the supply position is becoming more difficult as time goes on.

Captain Strickland: Is the right hon. Gentleman aware that men discharged for inefficiency from works fire brigades and joining the N.F.S. at once get a full issue of uniform, while the only issue available to industrial fire brigades on payment is made of cotton twill which is quite unsuitable?

Mr. Morrison: I do not think I should be disposed to accept the assumption on which that question is based.

Captain Strickland: If I bring a definite case before the right hon. Gentleman where such a thing has happened, will he look into it?

Mr. Morrison: Certainly.

CIVIL DEFENCE

Prosecutions

Mr. Rhys Davies: asked the Home Secretary the number, up to the last available date, of persons prosecuted for violating the several regulations covering air-raid precautions, Civil Defence, fire-watching and kindred services; and how many have been imprisoned, male and female, respectively?

Mr. H. Morrison: I regret that the information asked for is not available, and, in view of the pressure upon local authorities and their staffs, I should not feel justified in asking them to prepare statistics of this nature.

Mr. Davies: Is it intended to publish these figures when the situation has eased?

Mr. Morrison: I could not say. I do not know whether the records will exist.

Travel Permits to Northern Ireland

Dr. Little: asked the Home Secretary whether, owing to the largely increased acreage under tillage, he will grant to teachers from Northern Ireland in Great Britain who can satisfy him that

they have arranged with farmers to assist in harvesting operations during the summer holidays permits to enable them to travel to Northern Ireland for that purpose?

Mr. H. Morrison: No, Sir. Under the change in the Regulations made last year such persons 'were allowed to pay two visits to Ireland in the 12-month period which commenced on 1st October, 1942. My hon. Friend appears to be asking that three visits should now be allowed, but I am not prepared to make this further concession.

Dr. Little: Will the arrangements already entered into with Northern Ireland farmers to act as land girls and harvest workers, when their help is so much needed have to be cancelled owing to the slavish adherence to the letter rather than to the spirit of the law bearing on the granting of travel permits?

Mr. Morrison: I am delighted, and the Minister of Agriculture will be delighted, to know that teachers are anxious to work on the land. If the hon. Member knows of any such cases, the Minister of Agriculture will be glad to fix them up in Great Britain.

Emergency Water Supplies (Protective Safeguards)

Mr. Ammon: asked the Home Secretary when he proposes to implement the promise given in November last to place protective safeguards on the emergency water supplies?

Mr. H. Morrison: The necessary instructions were issued on 26th November last and the provision of protective safeguards is proceeding as rapidly as available resources in labour and materials permit. Progress on the whole has been good, and in most Regions the above ground installations will have been provided with barbed wire protection within the near future. The protection of basement installations by brick walling will take a little longer in certain places where the work to be done is extensive and the labour situation difficult, but special efforts have been made to mobilise labour resources for the purpose in those areas.

Mr. Ammon: Can my right hon. Friend say where protective safeguards have been placed, because it is difficult to find


them? With the advent of fine weather the casualties are mounting again.

Mr. Morrison: My recollection is that the barbed wire is to be placed somewhere about the top of the wall.

Mr. Ammon: I mean in what towns?

Mr. Morrison: All over the country.

Mr. Ammon: Not in London.

Mr. Morrison: London is coming along.

SPEED OFFENCES (POLICE TIMING)

Wing-Commander Hulbert: asked the Home Secretary how many police forces in England and Wales time the speed of motor-vehicles by a system of hand signals by police officers; and whether this method is considered satisfactory?

Mr. H. Morrison: I regret that I have not the information to enable me to answer the first part of the Question. There is no reason why, in competent hands, the method of timing referred to should not produce accurate records of speed.

Wing-Commander Hulbert: Is the right hon. Gentleman aware that this practice is continually being condemned by judges and chairmen of quarter sessions owing to the likelihood of error' which always works against the motorist?

Mr. Morrison: I have not been aware that there was general discontent in the Courts. I am aware that any motorist who gets caught for speeding feels that there is something wrong about it.

Wing-Commander Hulbert: In view of the fact that private motoring is now nonexistent and the only motor cars on the road are those engaged on essential services, will the right hon. Gentleman abolish the system?

Mr. Morrison: On the other hand, it has been impressed upon the public by the Supply Departments that unnecessary speeding is wasteful of petrol and rubber. In any case I am really not concerned with the merits of the law. I find the law as it is, and I have to enforce it.

Mr. R. J. Taylor: Is my right hon. Friend aware that although there are

fewer cars on the road, the public are greatly alarmed at the number of fatalities?

ELECTORAL REFORM

Mr. Stokes: asked the Home Secretary whether he can now make a statement regarding electoral reform, especially with regard to by-elections in war-time?

Mr. H. Morrison: I regret that I am still unable to add anything to the reply which my right hon. Friend the Parliamentary Under-Secretary of State gave to the Question on this subject by my bon. Friend the Member for East Birkenhead (Mr. Graham White) on 12th May.

Mr. Stokes: Does my right hon. Friend recollect that the Prime Minister said that a statement would probably be made before. Easter and that he himself a few weeks ago told me he hoped to make a statement before Whitsuntide?

Mr. Morrison: What the Prime Minister said was that he might be able to make a statement before Easter, and I said that if I could not make a statement before Whitsuntide, I. should be very disappointed. I hasten to add that I am.

Mr. Graham White: Will this statement give an opportunity for a Debate?

Mr. Morrison: I think not. I propose to make a Parliamentary statement in answer to a Question or otherwise, but I cannot commit myself that legislation will be involved. I think that it probably will be, in which case there would be ample opportunity for the House to debate and examine the proposals.

EXPLOSION, WEST END (INQUIRY)

Mr. Thorne: asked the Home Secretary whether he can give any information about the explosion at the junction of Dean Street and Romilly Street on the night of 29th May; what amount of damage was done; if any people were injured; and what was the cause of the explosion?

Mr. H. Morrison: I am informed that this incident is the subject of a criminal charge, the trial of which is pending. In these circumstances all I can properly say is that the damage was not extensive and that happily nobody was injured.

Mr. Thorne: Who is prosecuting in the matter?

Mr. Morrison: I am afraid I cannot say without notice.

DOG TRAINER (CONVICTION)

Sir J. Lucas: asked the Home Secretary whether his attention has been drawn to the remarks on 27th May of Sir Gervais Rentoul when convicting a dog trainer of the international circus for cruelty; and whether he will see that the act concerned is withdrawn?

Mr. H. Morrison: I have seen news reports of these remarks. Power to suppress the training or exhibtion of a performing lies not with me but with a court of summary jurisdiction, which, on complaint of cruelty in these connections by a constable or officer of a local authority, has power by order to prohibit the training or exhibition, or to impose conditions thereon. Further, in addition to, or in lieu of, a penalty imposed for an offence under the Protection of Animals Act, 1911, the Court has power to order the removal of the offender's name from the Performing Animals Register, or order his permanent or temporary disqualification from registration.

EDUCATION

Knightley School, Staffordshire

Mr. Messer: asked the President of the Board of Education whether his inspectors have drawn attention to the unsatisfactory conditions of the Knightley School, Staffordshire; and whether he proposes to take any steps to compel the governors of the school to effect some improvement especially in hygiene and sanitation?

The President of the Board of Education (Mr. Butler): I understand from His Majesty's Inspector that the premises of Knightley Church of England School do not fall below the general standards commonly found in village schools. The sanitary arrangements are kept under periodical observation by the school medical officer.

Mr. Messer: Is it not possible for the Minister to take some definite action to prevent this sort of thing where children are being educated under primitive conditions?

Mr. Butler: The hon. Member will no doubt await the reforms I have in mind.

Youth Organisations

Mr. Norman Bower: asked the President of the Board of Education, on what grounds youth organisations sponsored by political parties have been forbidden to affiliate to local youth committees; and whether, in view of the disappointment which it has caused, he will consider modifying this decision?

Mr. Butler: I would refer the hon. Member to the reply given on 1st October, 1942, to the hon. Member for West Lewisham (Mr. Brooke) a copy of which I am sending to him.

School Camps

Mr. Graham White: asked the President of the Board of Education whether he can make a statement with regard to the experience of the 30 school camps-built by the Government at the outbreak of war, including the uses to which they are now being put?

Mr. Butler: The national camps, which were originally designed as school camps for occupation by successive groups of children drawn from town schools, have, as a result of the war, been utilised as boarding schools for evacuated school children. 25 of them are occupied by elementary schools, two by secondary schools, two by schools for defective children and one by an orphanage. The educational and physical advantages derived by the children attending the camps are beyond doubt.

WIDOWS' PENSIONS

Mr. Foster: asked the Minister of Health whether, in view of the increasing number of widows who have been deprived of pensions under the Widows', Orphans' and Old Age Contributory Pensions Act, 1936, owing to the failure of their husbands to make the necessary 104 contributions under Section 5 (1) of the Act, for various reasons, and the hardship caused thereby, he will consider the advisability of steps being taken to modify the number of contributions to be made under that Section of the Act?

The Minister of Health (Mr. Ernest Brown): The point raised by my hon. Friend will be considered in connection


with the Government's examination of the proposals contained in Sir William Beveridge's Report.

PUBLIC HEALTH

Emergency Domiciliary Medical Service

Mr. Messer: asked the Minister of Health whether he is aware of the need for an emergency domiciliary medical service; and whether he proposes to take any steps to meet this need in view of the shortage of general practitioners?

Mr. E. Brown: The ordinary practice is for a doctor to make arrangements by which his patients may obtain treatment from a colleague in an emergency when he himself is not available, and I am not aware of any general need for the establishment of collective schemes for this purpose. I do not think therefore that it is necessary for me to take steps for the promotion of such schemes, but where such a scheme is adopted by general consent I am ready to do what I can to facilitate its working.

Mr. Messer: Does that mean that the right hon. Gentleman has not received the report of the Medical Practitioners' Union on this question?

Mr. Brown: No, but the evidence is known.

Mr. Rhys Davies: Is there any arrangement between the right hon. Gentleman's Department and the Fighting Services so that districts shall not be denuded of medical practitioners?

Mr. Brown: There is a medical priorities committee sittting.

Tuberculosis Cases (Accommodation)

Sir Leonard Lyle: asked the Minister of Health whether he can give, by counties, the number of reported tuberculosis cases and the shortage of beds needed to accommodate patients?

Mr. E. Brown: I am uncertain for what figures my hon. Friend is asking in the first part of the Question, and I am communicating with him on this. As the reply to the second part involves a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Sir L. Lyle: In view of the increasingly serious position with regard to tuberculosis,

will my right hon. Friend exert a little more pressure—I know that he has exerted some—on the Ministry of Supply to release the material necessary to complete a lot of sanatoria?

Mr. Brown: We are doing all we can, but the House is aware that the priorities are considerable.

Mr. George Griffiths: Is it not possible to transfer beds from places where there is not sufficient staff and where there are empty beds to places where they are required?

Mr. Brown: That is another issue, but I do not think it would solve the problem.

Following are the figures:

TUBERCULOSIS.

ENGLAND AND WALES.

Number of patients on Waiting List, at 31st March, 1943, who had been waiting for a bed for more than 10 days.

Pulmonary
Non Pulmonary


Bedfordshire
15
11


Berkshire
9
1


Reading
5
—


Total
14
1


Buckinghamshire
12
2


Cambridgeshire
13
1


Cheshire
33
11


Birkenhead
6
2


Total
39
13


Cornwall
16
—


Cumberland
31
3


Derbyshire
25
31


Devon
41
—


Exeter
—
3


Plymouth
2
—


Total
43
3


Dorset
6
—


Durham
107
12


Gateshead
25
2


Sunderland
6
—


West Hartlepool
3
1


Total
141
15


Isle of Ely
2
1

Pulmonary
Non Pulmonary


Gloucestershire Joint Board




Board
44
9


Bristol
20
5


Total
64
14


Herefordshire
8
—


Hertfordshire
17
2


Huntingdonshire
5
—


Kent
104
6


Canterbury
6
—


Total
110
6


Lancashire
60
30


Barrow-in-Furness
2
—


Blackburn
3
—


Blackpool
22
1


Bootle
2
—


Burnley
3
—


Liverpool
111
4


Manchester
41
6


Oldham
6
1


Preston
5
—


Salford
15
—


Southport
1
5


Wigan
9
1


Total
280
48


Leicestershire
2
2


Leicester
32
10


Total
34
12


Lincs. Kesteven
9
1


Lincs. Lindsey
12
3


London
13
1


Essex
91
27


East Ham
3
2


Southend-on-Sea
3
—


West Ham
3
—


Total
100
29


Norfolk
—
—


Norwich
1
1


Total
1
1


Northants
2
—


Northumberland
—
—


Newcastle-on-Tyne
15
2


Total
15
2


Nottinghamshire
11
—


Nottingham
76
—


Total
87
—


Oxfordshire
19
4

Pulmonary
Non-Pulmonary


Shrophsire
9
—


Somerset
17
3


Bath
6
—


Total
23
3


Hants
11
10


Bournemouth
1
—


Portsmouth
10
11


Southampton
17
—


Total
39
21


Staffordshire
—
—


Wolverhampton and Dudley Joint Board
61
6


Stoke-on-Trent
20
—


Total
81
6


East Suffolk
1
—


Ipswich
2
—


Total
3
—


East Suffolk
1
—


Ipswich
2
—


Total
3
—


Surrey
190
19


Croydon
7
1


Total
197
20


Middlesex
188
23


East Sussex
—
3


Brighton
9
—


Total
9
3


Warwick and Coventry Joint Board for T.B.
35
26


Birmingham
18
4


Total
53
30


Wight, Isle of
2
2


wiltshire
10
9


Worcestershire
27
1


Worcester
13
1


Total
40
2


Yorkshire—East Riding
—
—


Hull
9
—


Total
9
—


Yorkshire—North Riding
—
—


Middlesbrough
6
—


Total
6
—


Yorkshire—West Riding
156
19


Leeds
56
6


Rothcrham
2
—


Total
214
25

Pulmonary
Non-Pulmonary


Wales—




Anglesey
3
—


Brecon
3
2


Caernarvon
19
4


Cardigan
4
1


Carmarthen
2
1


Denbigh
4
1


Flint
7
—


Merioneth
2
—


Pembroke
3
1


Montgomery
3
—


Glamorgan
94
23


Cardiff
45
8


Merthyr Tydfil
9
2


Swansea
11
3


Total
159
36


Monmouth
42
17


Newport, Mon.
14
5


Total
56
22

National Health Service (Discussions)

Mr. Quintin Hogg: asked the Minister of Health whether he is now in a position to say when a White Paper on the subject of Assumption B of Sir William Beveridge's Report is to be issued?

Mr. E. Brown: I would refer my hon. Friend to the reply which I gave on 26th May to my hon. Friend the Member for London University (Sir E. Graham-Little).

Mr. Hogg: In view of the misapprehensions arising from the reported statement of my right hon. Friend to the effect that his proposals are "in the discard," will he give an unequivocal assurance that the Government's acceptance of Assumption B in the Beveridge Report has not been abandoned?

Mr. Brown: Certainly, Sir.

Sir Francis Fremantle: Will there be an opportunity for the House to discuss Assumption B?

Mr. Brown: That is a matter for the House itself, by arrangement.

Sickness Incidence

Mr. Rhys Davies: asked the Minister of Health whether he is aware that there is evidence from recent statistics of approved societies that there is a substantial increase in the incidence of sickness among the insured population; and will he inquire as to the extent to which long hours of labour and fatigue resulting from Civil Defence and Home Guard duties are responsible for this and issue a Report on his findings?

Mr. E. Brown: I am aware that there has been an increase in the incidence of short-term sickness among the insured population. I have however no evidence to suggest that the increase is attributable to the factors indicated in my hon. Friend's Question and I do not think that an inquiry on the lines contemplated by him would serve a useful purpose, since it would be impossible to dissociate these factors from other circumstances arising out of the war.

Mr. Davies: Is there any contact between the medical department of the Ministry of Health and the Ministries of Labour and Home Security to prevent undue physical strain being brought upon workpeople and thus sending then on to the funds of approved societies?

Mr. Brown: There is the closest connection between the Departments on this matter.

Water Supply, Ripon

Major York: asked the Minister of Health whether his attention has been called to the unsatisfactory position of the water supply to the city of Ripon, caused by the lack of supervision, particularly at night, of the reservoir installations; and whether he will rectify the position by arranging for the release of one of the prewar staff from the services?

Mr. E. Brown: I am aware of the difficulty to which my hon. and gallant Friend refers. My right hon. Friend the Secretary of State for War has agreed to the release from the Army of one of the men previously engaged on this work.

Death Rates

Sir Francis Fremantle: asked the Minister of Health, respectively, the male and female death rates for 1942 and their comparison with those of 1938?

Mr. E. Brown: The death rates for males and females in 1942 (civilians only) in England and Wales were 14.4 and 10.7 per i,000 population, and in 1938 they were 12.5 and 10.8 respectively. Direct comparison between 1938 and 1942 is vitiated by the exclusion in 1942 of young and medically selected persons in the Forces.

Sir F. Fremantle: Is the reduction not very largely due to the introduction and use of the new sulphonomide M. & B. 693 in infectious cases?

Mr. Brown: That is one element, but there are many other factors. These figures do show the extraordinary strength and character of the British people.

Sir F. Fremantle: asked the Minister of Health the child mortality in 1942 and its comparison with that of pre-war years?

Mr. Brown: The mortality rate for infants under one year of age in England and Wales in 1942 was 49 per 1,000 births. The corresponding rates for 1936, 1937 and 1938 were 59, 58 and 53, respectively. The death rate for children at ages one to five in England and Wales in 1942 was 3,424 per million population. The corresponding rates for 1936, 1937 and 1938 were 5,508, 5,121 and 4,600, respectively.

Sir F. Fremantle: Does that answer imply that there has been something like a reduction of one-half in about half-a-dozen years in the case of children under five?

Mr. Brown: The country will draw its own conclusions, but it is a most satisfactory statement.

Sir A. Knox: Is this due to the fact that so many doctors are abroad on active service?

Mr. Brown: That is a very pleasant jibe, but it does less than justice to the magnificent services rendered by the doctors.

Sir F. Fremantle: asked the Minister of Health the death rate in 1942, at ages under 15 years, from diphtheria and its comparison with that of previous years?

Mr. Brown: The death rate from diphtheria at ages under 15 in 1942 in England and Wales was 192 per million

population. The corresponding death rates in 1939, 1940 and 1941 were 228, 266 and 280, respectively.

Mr. Sorensen: Is that due to an improvement in the British character?

Mr. Brown: Partly to that and partly to adopting modern devices and skilfully using them.

Sir F. Fremantle: Is it not due to the campaign for immunisation which we hope to extend very largely in the present six months?

Mr. Brown: That was one of the elements coming under my general phrase.

Maternity Cases (Accommodation)

Mr. Sorensen: asked the Minister of Health whether in his consideration of future adequate national health and medical services, special attention is being given to the need of providing efficient municipal maternity homes throughout the country; and whether he will state the present number of private and municipal maternity homes and their respective number of beds?

Mr. E. Brown: In the schemes for the future the provision of adequate accommodation for maternity cases is being considered in common with all other classes of case needing institutional care. According to the latest figures in my Department, there are some 4,100 maternity beds in voluntary institutions, 8,000 in municipal homes and hospitals and over 3,000 in the emergency maternity homes established by my Department, making a total of between 15,000 and 16,000 beds in all.

Mr. Sorensen: In view of the shortage of beds in maternity hospitals at the present time, can the right hon. Gentleman give an assurance that plans are being prepared to see that every area in the country has an adequate maternity service?

Mr. Brown: We are doing our utmost under war conditions.

Dr. Edith Summerskill: Is the right hon. Gentleman aware that he has given that answer on many other occasions? Is he further aware that expectant mothers are turned away from hospitals in this country every day, for lack of accommodation?

Mr. Brown: No doubt the hon. Lady knows that there are thousands more beds than there were when the war broke out and that their number is still being added to.

Sir F. Fremantle: To what extent has the recent call for an increased service of nurses and midwives affected the situation?

Mr. Brown: I would like to see that question on the Paper. As the House knows, we have been taking very active steps in this matter.

Mr. Sorensen: Will not the right hon. Gentleman make a special inquiry into this urgent matter?

Mr. Brown: There is no need for a special inquiry. We know the facts, and we are working hard to make the maternity services as effective as they can be made.

HOUSING

Agricultural Workers

Mr. De la Bèere: asked the Minister of Health whether he has conferred with the Minister of Agriculture with a view to arriving at a programme and target to be achieved in building farm-workers cottages for 1944, in view of the inevitable delay which arises after the programme has been sanctioned?

Mr. E. Brown: I am keeping in close touch with my right hon. Friend with a view to undertaking the maximum possible programme that the resources of labour and material may permit.

Mr. De la Bère: Do the Government really take any account of the time factor, and is it not a fact that in all probability there will be no completed houses for farm workers in 1943? It really is not good enough.

Mr. Brown: My hon. Friend's Question asks about 1944.

Mr. De la Bère: My right hon. Friend knows better than to argue against the facts; it is very wise.

Major Lyons: asked the Minister of Health whether tenders for the authorised 3,000 rural cottages will be allocated on a basis of time of completion as well as of price; and whether, as yet, he is in a position to give an estimate of the average

number of weeks required for completion of building and the estimated all-in cost per cottage?

Mr. Brown: The answer to the first part of the Question is that price is at present the primary consideration, but the period for completion will also be borne in mind. The answer to the second part of the Question is "No, Sir."

Major Lyons: Can the right hon. Gentleman say when he expects the first real, active steps will be taken for the erection of the first of these cottages?

Mr. Brown: As soon as we are able to approve tenders.

Major Lyons: Will that be this year or next?

Mr. Brown: Quite shortly.

Mr. Higgs: Is the Minister aware that quotations as high as £2,400 for a pair of cottages are being received, and does he think that in these circumstances the proposition is worth proceeding with?

Mr. Brown: My hon. Friend is taking something he has seen in the newspapers. He had better wait until I can give an answer and he can see the whole lay-out. He will find the figures much below that.

Sir Herbert Williams: Is my right hon. Friend aware that before the war we were building twice as many houses as this every week?

Mr. Brown: I am quite aware of that, but we are at war.

Sir Percy Hurd: asked the Minister of Health whether the attention of his Central Housing Advisory Committee has been drawn to the model of a rural worker's dwelling on exhibition in Edinburgh embodying the ideas of 30,000 Scottish women as to the style and interior of the dwelling best suited to the needs of the rural worker; and whether, in view of the year's housing programme which rural district councils in England and Wales are being asked to prepare, he will have the best ideas of English and Welsh housewives embodied in models and sent on tour through the rural centres of this country?

Mr. Brown: I understand that this model was designed by an architect in private practice at the request of the Scottish Women's Rural Institutes to illustrate


suggestions put forward in evidence by members of the Institutes to the Scottish Housing Advisory Committee. The Sub-Committee of my own Central Housing Advisory. Committee which is also considering the design of post-war dwellings under the chairmanship of Lord Dudley is in touch with the Scottish Committee and has been supplied with copies of all the evidence submitted to it. Lord Dudley's Sub-Committee has also received evidence from a number of bodies well qualified to represent the point of view of working housewives in England and Wales and the type plans circulated to Rural District Councils in connection with the emergency scheme for agricultural cottages included plans recommended by the Sub-Commitee after considering this evidence. These were, however, interim recommendations, and I understand that the Sub-Committee's final report will not be ready before the end of the summer. I intend that the recommendations in the Report shall receive the widest publicity, and I will certainly give sympathetic consideration to my hon. Friend's suggestion.

Sir P. Hurd: Does that relate to the circulation, on tour, of a type of model for the inspection of housing authorities as well as the community?

Mr. Brown: The English Committee are very keen on models, and the Rural Housing Sub-Committee recommended to the main Committee in January last that consideration should be given to their preparation.

Mr. Cocks: asked the Minister of Health what progress has been made in the erection of the 3,000 rural cottages which the Government have stated are to be completed this year?

Mr. Brown: By 28th May sites had been selected and approved for 2,734 houses, and plans had been approved for 1,624. Tenders for substantial numbers are expected soon, and I hope shortly to be able to make a general statement on the scheme.

Mr. Cocks: Could the Minister say what has been the cause of these delays in building these cottages and also whether the Government are still deter' mined that the cottages shall be built this year?

Mr. Brown: That, of course, is our intention, but my hon. Friend will understand that there is a mass of detailed work to be done to get to the point where tenders can be approved, and the selection of sites in 382 rural districts has meant a considerable amount of hard, detailed work.

Mr. Moelwyn Hughes: When the right hon. Gentleman talks about the approval of tenders does he mean approval by the local authorities concerned or approval by himself?

Mr. Brown: I meant the approval of tenders by myself. My hon. Friend will understand that all the tenders have to come to me for approval.

Mr. Hughes: Is it not a fact that a good many tenders have now been approved by local authorities?

Mr. Brown: Oh, yes, but they have to have my final word.

Mr. Colegate: Can the right hon. Gentleman assure us that his colleague the Minister of Labour has agreed to release sufficient building labour to enable these cottages and others to be built?

Mr. Brown: Both labour and materials will have the highest priority.

Earl Winterton: asked the Minister of Health the latest estimate of the shortage of cottages required to house married workers permanently employed in agriculture; and whether such an estimate includes cottages condemned before the war under the Housing Acts but still occupied?

Mr. Brown: The Government have in contemplation a ten-year programme of house construction, which would include about 300,000 cottages for agricultural workers, to cover all needs including the replacement of unfit property and other needs.

Earl Winterton: Do I understand the answer of the right hon. Gentleman to be that the shortage of cottages at present is 300,000?

Mr. Brown: Including the second part of my answer, the figure includes cottages under repair.

Earl Winterton: asked the Minister of Health when his Department first informed rural district councils that per-


mission had been given for the immediate construction of 3,000 cottages for agricultural workers; whether work has yet commenced on the erection of any of them; and, if not, whether he will take steps to accelerate their construction by the reduction of the number of authorities to be consulted or in other ways?

Mr. Brown: Rural district councils were authorised on 4th February to make preliminary arrangements, including selection of sites and plans and the obtaining of tenders. In view of the importance of the price of houses, acceptance of tenders requires, my approval. A number of tenders have now been received from districts through-out the country and hope shortly to be in a position to announce the decision of the Government in regard to them.

Earl Winterton: Is the right hon. Gentleman aware that Members in all parts of the House with a knowledge of rural conditions are seriously concerned at the administrative failure to give effect to this promise, and that we shall certainly approach the Prime Minister on his return and ask him for an inquiry into this administrative scandal?

Mr. Brown: I do not agree to that at all, but the noble lord will take his own course.

Major York: Is my right hon. Friend aware that owing to changes of mind regarding the type of houses there are still certain rural districts which have not yet settled on the type?

Mr. Brown: There are very few now.

Mr. Lipson: Can the right hon. Gentleman say how many tenders he has been asked to approve up to date?

Mr. Brown: No.

Mr. De la Bèere: May I make a most vigorous protest against what is happening—a very vigorous one?

Discrimination against Children

Mr. Hannah: asked the Minister of Health whether he will consider making it illegal for any landlord in letting houses or flats, to discriminate against tenants merely because they have children?

Mr. E. Brown: I do not consider that Action on the lines suggested by my hon.

Friend would be practicable. As he will be aware, my powers of billeting and requisitioning are sufficient to enable me to ensure that the needs of persons who are required to move in connection with the war effort are met.

BOMBING POLICY

Wing-Commander Hulbert: asked the Prime Minister whether the policy, announced on 27th May, in regard to the use of air bombing against the Axis Powers has the full support of all the United Nations?

The Deputy Prime Minister (Mr. Attlee): I have no reason to believe that our policy in regard to the use of air bombing against the Axis Powers does not have the full support of the United Nations.

DAY OF NATIONAL PRAYER

Dr. Little: asked the Prime Minister whether he has considered the resolution, a copy of which has been sent to him, of the Ulster United Prayer Movement asking for a weekday to be set apart for prayer; and whether he proposes to comply with that desire?

Mr. Attlee: The proposal to which my hon. Friend refers will be borne' in mind.

AGRICULTURE

Bovine Tuberculosis (Immunisation)

Mr. E. P. Smith: asked the Minister of Agriculture whether he has considered a letter in "The Farmer and Stockbreeder," of 20th April, a copy of which has been sent to him, describing the satisfactory results obtained at Pembury in Kent, in immunising a dairy herd against tuberculosis; and whether he will investigate the methods therein described?

The Minister of Agriculture (Mr. R. S. Hudson): The reply to the first part of the Question is in the affirmative. With regard to the latter part, there is no scientific evidence that the method of treatment referred to has any value for immunisation against tuberculosis, but I shall be prepared to consider any such evidence that may be submitted.

Government Policy

Mr. De la Bère: asked the Minister of Agriculture (1) whether he has now had an opportunity of fully considering the plans and proposals put forward by the Council of Agriculture for England; and what conclusion the Government have come to regarding these matters?
(2), whether it is the policy of the Government to establish commissions to control the import and distribution of foodstuffs and the development of marketing ports at the earliest opportunity after the cessation of hostilities; and what steps the Government are taking to ensure that there shall be no restriction of home production in future years?

Mr. Hudson: I have received the report on long-term agricultural policy adopted by the Council of Agriculture for England at their meeting on 26th May, and this report, along with those published in recent months by other bodies, will receive full consideration. As to the other points, I would refer my hon. Friend to the reply given by the Deputy Prime Minister to the hon. Member for Harborough (Mr. Tree) on 11th May.

Mr. De la Bère: Are we to understand that all relevant facts are being considered and that the usual Government policy of stagnation will be vigorously pursued?

Brig.-General Clifton Brown: Is it not a fact that this Council is representative of all sections of the agricultural community, and will the right hon. Gentleman give some indication of whether the Government's policy is one of approval of the report?

Mr. Hudson: That is one of the relevant facts which will be borne in mind.

Uncultivated Land, Industrial Areas

Mr. Foster: asked the Minister of Agriculture whether he is aware that there are large plots of land in industrial areas suitable for cultivation lying idle and derelict; is he satisfied that his Department or the local authorities have got sufficient powers for taking over such land for cultivation purposes, either as allotments or by local farmers; and, if not, will he take further powers?

Mr. Hudson: I am not aware that any large extent of land suitable for cultiva-

tion in industrial areas is lying idle and derelict, but if the hon. Member will quote any specific instance, I shall be glad to look into it. I am satisfied that my existing powers under Defence Regulations are adequate to secure the cultivation of any such land, so far as is practicable.

Mr. Foster: Is the right hon. Gentleman not aware that speculators bought land before the war and cleared off allotment holders and are now holding up that land for building purposes, so that at present it is lying derelict, although it might be made to serve a useful purpose in growing food?

Mr. Hudson: I have just said that I did not know of any cases. If the hon. Member has a specific case and will let me have the particulars, I will have it dealt with.

Mr. Foster: I will send the case on.

TOWN AND COUNTRY PLANNING

Gardens and Open Spaces (Railings)

Lieutenant-Colonel Sir Thomas Moore: asked the Minister of Town and Country Planning, how far responsibility lies with him for initiating negotiations for the future of the gardens and open places in cities and towns, and especially in London, from which the railings have been removed?

The Minister of Town and Country Planning (Mr. W. S. Morrison): The general responsibility for formulating proposals in regard to open spaces, whether railings have been removed from them or not, rests with the planning authorities concerned, and, when the Bill now before Parliament becomes law, all areas will be the subject of schemes under the Town and Country Planning Act, 1932, which are submitted to me for approval. I would also refer. my hon. and gallant Friend to the provisions of the London Squares Preservation Act, 1931. In the case of the Royal Parks the responsibility lies with my noble Friend the Minister of Works.

Sir T. Moore: Has my right hon. Friend, his Department or the Government any general policy of preservation of parks, squares and private property respectively?

Mr. Morrison: There is a policy to preserve these squares as far as possible.

Green Belts

Mr. Bossom: asked the Minister of Town and Country Planning how it is intended that local authorities should proceed to acquire land for their post-war housing estates, even enough to comply with their first-year programme, until the Government has decided upon its policy regarding green belts surrounding built-up areas?

Mr. W. S. Morrison: As my right hon. Friend the Minister of Health informed the hon. Member on 10th May, there are many areas in which housing sites can be chosen which do not raise any such question. In any case, close co-operation between my Department, the Ministry of Health and the Ministry of Agriculture, both in the region and at headquarters, will secure that sites are not selected without due regard to the need for green belts and to other requirements of good planning.

Mr. Bossom: Is the country to infer from that answer that green belts have been adopted, as a policy, by my right hon. Friend's Department?

Mr. Morrison: The position is that, where they can be provided, green belts are desirable.

Mr. Bossom: Would my right hon. Friend be kind enough to answer my question? We all know that green belts are desirable, but is it the policy of the Ministry of Town and Country Planning to provide green belts?

Mr. Morrison: In all proper cases.

INTEREST-FREE LOANS

Mr. Lipson: asked the Chancellor of the Exchequer the amount of free-of-interest loans he has received since the outbreak of the war?

The Chancellor of the Exchequer (Sir Kingsley Wood): £56,859,000.

Mr. Lipson: How many individual loans are covered by that amount? Has the National Savings Committee had its attention drawn to this particular matter?

Sir K. Wood: I think my hon. Friend had better put that question down.

Mr. Lipson: May I have an answer to the second part of my question?

EIRE (REMITTANCES FROM THE UNITED KINGDOM)

Dr. Little: asked the Chancellor of the Exchequer the total amount of money from the United-Kingdom of Great Britain and Northern Ireland that has been forwarded to Eire by cheques, money, postal and telegraph orders, for each of the years since the outbreak of war?

Sir K. Wood: As the answer involves a table of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the table:


The figures for money orders and postal orders are as follow:



For the Year ending 31st August
For the Half-Year ending 28th February 1943.


1940.
1941.
1942.



£000
£000
£000
£000


Money Orders*
645
1,185
3,410
2,550


Postal Order
404
339
425
270


*Including telegraphic Money Orders, for which separate figures are not kept.


Figures for remittances by cheque are not available.

BUSINESS OF THE HOUSE

Mr. Arthur Greenwood: May I ask the Deputy Prime Minister whether he will state the Business for the forthcoming Sittings?

Mr. Attlee: The Business for the forthcoming series of Sittings will be as follows:

First Sitting Day—Supply (9th allotted day) Committee. A Debate will take place on Housing and Health in Scotland.

Second Sitting Day—Committee and remaining stages of the Pensions and Determination of Needs Bill, and consideration of Amendments to the Catering Wages Bill which are expected to be received from another place.

Third Sitting Day—It is proposed to adjourn for the Whitsuntide Recess.

Lieut.-Colonel Sir Ian Fraser: Can the right hon. Gentleman now state whether the Government will give a day, and if


so, when, for a Debate on the Motion which stands in my name and in the name of Members of all parties, asking for a Select Committee on war pensions?

Mr. Attlee: With regard to the specific Motion, I should not like to bind myself at the moment. I understand that the Minister of Pensions is making a comprehensive review of all those subjects which were raised in the recent Debate and suggestions put forward from other quarters, and until that review has been made I think it will not be reasonable to have the Debate. It will be better to await the result of that review being made, and the House will then be able to have a full Debate on the matter.

Sir I. Fraser: Does the right hon. Gentleman realise that the Select Committee which was set up in 1919 reported to this House within 3½ months of its setting-up upon all the contentious matters which were then disturbing people, and that 2½ months have already passed since we had a big Debate in this House? Can he assure us that the matter will be pressed forward? If the Minister has proposals to make which might render a Select Committee unnecessary, can he not tell the House, by answer to a Question, for example, so that we can consider our action before the Debate takes place?

Mr. Attlee: I can assure my hon. and gallant Friend that this matter is being pressed forward. I have given full consideration to the suggestion made with regard to prior statements for information.

Mr. Greenwood: Is the proposal to undertake a review to be presented to the House by the Minister of Pensions in the form of conclusions? If so, could that not be made the basis of a Debate such as hon. Members desire?

Mr. Attlee: That is another point which I shall take into very full consideration. Obviously it is one way in which there might be a Debate.

Mr. Greenwood: Does my right hon. Friend realise that this matter has been before the House for some time and that there is a certain amount of feeling on the matter? Will my right hon. Friend be good enough to make the most convenient arrangement at the earliest possible date, as I am sure it would meet the wishes of the House?

Sir H. Williams: When is it likely that the Motion will be taken for continuing for another year the Emergency Powers Act?

Mr. Attlee: I understand that it has to be taken before July.

Mr. Buchanan: Will the right hon. Gentleman consider fixing the pensions Debate for an early date, and in addition issue a White Paper with the Minister's proposals, so that we can have some idea of the remedies he is proposing to meet the situation? As to the Scottish Business which has been announced, in view of the serious and urgent nature of matters connected with Scottish housing and health, as is now admitted by all, is it proposed to suspend the Rule so as to give extra time for the discussion?

Mr. Attlee: With regard to the first point, I have already said that that matter will be considered, but with regard to the Debate on Scottish housing and health, we shall consider the suggestion, and if there is a general desire for an extended Debate, it will be met.

Mr. A. Bevan: It was difficult to catch the annoncement on Business over here. Is it intended to take the Committee stage and the remaining stages of the Pensions and Determination of Needs Bill on the second Sitting Day?

Mr. Attlee: Yes, we hope to take that.

Mr. Bevan: Will the right hon. Gentleman take into consideration between now and then that there may be a little controversy over this, and that he should content himself with the Committee stage alone?

Earl Winterton: May I ask the right hon. Gentleman to make quite clear the pledge which he has given to my right hon. Friend the Member for Wakefield (Mr. Greenwood)? I understand that he has undertaken that at the earliest possible date there will be a comprehensive Debate on pensions. Do I understand from that promise which he has given that that is contingent upon a decision being reached by the Minister of Pensions, or are the Government as a whole concerned to see that the Minister of Pensions comes to some decision at the earliest possible date?

Mr. Attlee: I do not quite see the difficulty. The point is that the Minister of


Pensions is pressing on with this inquiry and reviewing all these subjects. As soon as he can come to a conclusion it is the desire of the Government that there shall be an opportunity for the House to debate it. I have also said that consideration will be given to issuing a Paper on the subject in advance in order that there may be that subject matter for the Debate.

Earl Winterton: Is the right hon. Gentleman not aware that we have been asking for this Debate for weeks and weeks? In view of the almost unanimous feeling in the House that there must be some discussion, surely the Government as a whole will make themselves responsible for seeing that a decision is reached by the Minister of Pensions at an early date?

Mr. Attlee: The noble Lord will realise that we had a Debate on 23rd March. A very large number of points were raised, and these are being looked into by the Minister of Pensions, and he has said that he is coming to a decision on these matters as quickly as possible. As soon as the Government have had those decisions, the matter will be brought before the House for discussion. I do not really think there is any difficulty. The Government desire to have this Debate as soon as we are in a position to have the decisions on which that Debate can be held.

Miss Rathbone: Will the right hon. Gentleman give consideration to the wishes for a discussion at an early date of the very widely signed notice of Motion in the name of the hon. and gallant Member for Erdington (Group Captain Wright) and a great many other Members on the question of the trend of the population and the alarmingly low birth rate.

[That this House views with alarm the continuing low birthrate and the resulting approach of a decline in population so steep as to menace the future security and prosperity of the British nation and race, and urges His Majesty's Government to adopt all possible measures, economic and educational, to avert this danger, including the introduction at the earliest practicable date of a scheme of children's allowances and improved social services, as already approved in principle by His Majesty's Government.]

Mr. Attlee: I think it will be difficult to find time for a Debate on that Motion, but the matter can be raised very fully on the Estimates of the Ministry of Health.

Mr. Evelyn Walkden: Is the right hon. Gentleman aware, if I may refer back to' pensions, that the questions refer not only to the Ministry of Pensions, but that the Ministry of Health is involved, that the Ministry of Pensions on the one hand gives to dependants pensions or allowances, and the Ministry of Health takes them away. Cannot we have the whole matter examined either by a Select Committee or some Cabinet Committee, but some other committee removed from the Ministry of Pensions, because otherwise the answer will still be unsatisfactory?

Mr. Attlee: That is a different matter. I was dealing with a specific point about the Ministry of Pensions.

Sir Irving Albery: Can the right hon. Gentleman give some indication as to about what time this House will be asked to approve the renewal of the Defence Regulations?

Mr. Attlee: I did answer that question: perhaps the hon. Member did not hear my answer to the hon. Member for South Croydon (Sir H. Williams), I think, sometime in July.

Mr. Buchanan: About the Pensions and Determination of Needs Bill, I understood from the right hon. Gentleman's answer that he was intending to take all the remaining stages—the Committee stage and the Third Reading on the second Sitting Day. That means in fact that the Government have closed their minds to any Amendment, because there must be a Report stage if there is any Amendment. Might I ask him not to press on with all the remaining stages but to leave his mind open for the discussion in this House?

Mr. Speaker: That is not a question on Business.

Mr. Buchanan: The right hon. Gentleman has said he is going to ask the House to take all the remaining stages of the Bill. May I ask him to leave his mind open to see whether amendment of the Bill is possible?

Mr. Attlee: I only expressed a hope, as usual, that we might take all stages. We shall have to see how it goes.

Major Braithwaite: I view of the serious position in the coalfields, and the request of the Prime Minister, will an early opportunity be given to the House for a discussion on the coal situation?

Mr. Attlee: We can certainly consider that.

HOUSE OF LORDS DEBATES (QUOTATIONS).

Mr. Mander: I beg to ask you, Mr. Speaker, a question of which I have given you notice, whether you will be good enough to give guidance to the House as to the conditions under which quotations may be made from speeches made in another place, either in the current Session or another Session?

Mr. Speaker: I am obliged to the hon. Member for giving me notice. The Rule is that Hon. Members must not refer to any Debate of the same Session in the House of Lords—Rule 155 (III), Manual of Procedure. This Rule is not always easy of enforcement. My predecessor has ruled that an announcement of Government Policy made in the House of Lords could be debated in the House of Commons. This therefore should be regarded as the only exception to the above Rule.
In these days, when daily reports of Debates in the other House are published, there is often a temptation to take notice of what has been said there, but it must be remembered that the Rule that allusions to Debates in the other House are out of Order prevents fruitless arguments between Members of two distinct bodies who are unable to reply to each other.
I have stated the conditions under which quotations may be made from speeches in the House of Lords, and I hope that this will remove uncertainty from the minds of hon. Members. The application of the Rule often presents difficulties, and I think the Chair can be safely entrusted with some latitude in its enforcement.

HOUSE OF COMMONS MEMBERS' FUND

Return presented,—relative thereto [Ordered 2nd June; Sir G. Courthope]; to lie upon the Table.

BILLS REPORTED

GRAND UNION CANAL BILL [Lords]

Reported, with Amendments, from the Committee on Group A of Private Bills (with Report on the Bill).

Bill, as amended, and Report to lie upon the Table. Report to be printed.

MARRIAGES PROVISIONAL ORDER BILL

Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time upon the next Sitting Day.

MINISTRY OF HEALTH PROVISIONAL ORDER (WETHERBY DISTRICT WATER) BILL

Reported, with Amendments, from the Committee on Unopposed Bills; as amended, to b considered upon the next Sitting Day.

MINISTRY OF HEALTH PROVISIONAL ORDER (HARROGATE) BILL

Reported, with Amendments, from the Committee on Unopposed Bills; as amended, to be considered upon the next Sitting Day.

MINISTRY OF HEALTH PROVISIONAL ORDER (BUCKS WATER BOARD) BILL

Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time upon the next Sitting Day.

MINISTRY OF HEALTH PROVISIONAL ORDER (BANBURY. WATER) BILL

Reported, with Amendments, from the Committee on Unopposed Bills; as amended, to be considered upon the next Sitting Day.

MINISTRY OF HEALTH PROVISIONAL ORDER (CHILTERN HILLS SPRING WATER) BILL

Reported, without Amendment, from the Committee on Unopposed Bills; to be read the Third time upon the next Sitting Day.

MESSAGE FROM THE LORDS

That they have agreed to—

Consolidated Fund (No. 3) Bill, with-out Amendment.

Catering Wages Bill, with Amendments.

CATERING WAGES BILL.

Lords Amendments to be considered upon the next Sitting Day, and to be printed. [Bill 41.1]

BUSINESS OF THE HOUSE.

Ordered,
That the proceedings on the Telegraph Bill be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)"—[Mr. Attlee.]

Orders of the Day — FINANCE BILL

Considered in Committee. [Progress, 2nd June.]

[Major MILNER in the Chair)

NEW CLAUSE.—(Easter Offerings.)

Easter offerings made to clergymen or other ministers of religion, up to a maximum of fifty pounds in any one year, shall not be regarded as income for any of the purposes of the Income Tax Acts for any future year of assessment.—[Mr. Ivor Thomas.]

Brought up, and read the First time.

Mr. Ivor Thomas: I beg to move, "That the Clause be read a Second time."
In doing so, I should like to clear away a misapprehension which may exist in some quarters. This new Clause is not intended to benefit the clergy of the Established Church alone. Its terms show clearly that its benefits could be claimed, and no doubt would be claimed, by ministers of all denominations. If it should lead to a wider appreciation of the significance of Easter among all denominations, I think the Clause would be doubly blessed. I hope that the
Chancellor of the Exchequer, as a good

Wesleyan, will appreciate that point. The Clause is designed to remove a grievance which has become more acute as the screw of taxation has been tightened. Easter offerings are wholly voluntary gifts made to an incumbent by such of his parishioners as feel so disposed, and it is a general principle of our law of taxation that gifts are not subject to Income Tax. If the Chancellor of the Exchequer in a mood of cherubic benevolence were to hand me a £1 note over the Table, or even a few units of "bancor," I should be under no obligation to include that in my Income Tax return; but if I, out of my heavily-taxed income, give a £1 note to the vicar of my parish at Easter, then the vicar would be subject to all the rigours of the law if he did not include that in his Income Tax return. In practice, if I wish to give a £1 note to 'the vicar of my parish at Easter, I am obliged at the same time to give an Easter offering of £1 to the Chancellor of the Exchequer, which is not my intention at all.
The assessment of Easter offerings for Income Tax thus contradicts a fundamental principle of our law of taxation. It discriminates against a body of men who render great service to the community, often for very meagre returns. How has this paradox come about? So far as can be seen, it was not the intention of the House that Easter offerings should be taxed. The law under which they are taxed is judge-made law. I do not dispute that judge-made law is as authoritative as Statute law, but I hope to show that there are at least elements of doubt about the grounds upon which the learned judges came to their decision. Income Tax was reintroduced in 1842 by an Act which made provision for levying a duty in respect of offices, employments or pensions
on all salaries, fees, wages, perquisites or profits whatever, accruing by reason of such offices, employments or pensions.
It is extraordinary, if the case for taxing Easter offerings is so obvious, that the astute officials of the Inland Revenue thought for over 6o years that this provision did not cover Easter offerings. These obviously are not "salaries, fees or wages." They are not "perquisites" within the legal meaning of that term, nor in any rational meaning of the word can they be regarded as "profits." But the


tax-gatherers' net has been spread ever more widely, and about 1905 the Inland Revenue made a determined effort to get Easter offerings into the bag.
The attempt caused dismay among the clergy, and the Easter offering at East Grinstead was made a test case. It has come down into history as Blakiston v. Cooper, and is the sole basis on which Easter offerings are taxed. The Income Tax Commissioners decided that the sum of 06 then collected was not subject to tax, and, in the lower court, Bray J. confirmed that decision; but the decision was reversed by the Court of Appeal and another place upheld the Appeal Court's decision. That is the basis on which Easter offerings have been taxed ever since. As it has been decided in another place that this is the law, it is the law, whatever Members of this House may have intended in 1842. But what the judges have done this House can undo. It has often happened that a Statute, as interpreted in the courts, brings consequences which this House never intended.
If the Committee will bear with me, I will give some reasons why in this case the law as interpreted in the courts should now be amended. As I have said, it is a general principle of taxation that gifts are not to be regarded as income. More precisely, according to Halsbury's "Laws of England," "gifts or voluntary allowances are not income in the hands of the recipient unless they are attached to and form part of the emoluments of an office, employment or vocation." The contention behind this proposed new Clause is that Easter offerings are not part of the emoluments of an office. They are gifts made to an individual in virtue of his personal qualities. The parishioner is absolutely free to give anything or nothing; to make a gift one year and to withhold it the next; to make a gift to one man he likes and withhold it from his successor whom he dislikes. The Rev. A. D. Light may get a bumper offering, but his neighbour the Rev. 0. Howe Boring may not even care to ask for one. In codnsidering his gift the parishioner will take into account such qualities as the incumbent's skill in preaching or the number of orphreys on his chasuable, according to his standards. If the parishioner is a Tory and the incumbent preaches Beveridge, the parishioner will

probably give nothing. If the parishioner is a Socialist and the incumbent puts Empire Day on a level with Ascension Day, he will probably give nothing. The mellifluousness of his voice, his attitude at the sick bed, the degree 'of his friendliness with the Girls' Friendly Society—these are the kind of qualities that induce the making of gifts. In short, the parishioner makes the gift to the vicar as a man and not to the vicar as a vicar. If I may make a subtle distinction in the Latin of the courts, it is true that the gift is made to the clergyman because he is a clergyman, but the fact that he is a clergyman is a causa sine qua non and not a causa causans. A present of grouse may be made by a patient to a doctor because he is a doctor, but the doctor would not be required to show it in his Income Tax return.
I hope I have said enough to prove to the Committee that Easter offerings are a personal gift to the man and not "profits accruing from an office." If not, my contention can be supported by a comparison of Eastern offerings with other emoluments of the clergyman's office. I refer to the fees which he receives from such rites as churchings, marriages and funerals and such grants in augmentation of his income as he may receive from the Additional Curate Society and similar bodies. These fees and grants are paid in respect of the office and not in respect of the man, and, as such, they are properly subject to tax. The fee paid for a funeral, for example, is a fee paid for services rendered, and the personality of the clergyman does not arise. A grant made by the Additional Curate Society for a second curate in a parish is a grant in respect of the office, and the curate may not even be appointed when it is made. I believe I have only to cite these facts to make it clear to the Committee that Easter offerings belong to an entirely different category.
I am not without hope that the Chancellor of the Exchequer, being a reasonable man, will accept this argument. But, like all Chancellors, he will not agree that two' and two make four unless he sees what use. We are going to make of the concession. He is afraid that if he opens the door someone will take it off its hinges. I hope that the limit of £50 mentioned in the Clause will, in this case, dissipate all his fears and remove all pos-


sibility of abuse. This limit, which is the amount of a fair Easter offering, is intended to ensure that the benefits of the Clause will be effective only as regards bona fide Easter gifts, such as were in existence before Income Tax was invented—and for those not familiar with the procedure, I should say that Easter offerings have not sprung up since Income Tax was. introduced for the purpose of evasion, but were in existence for hundreds of years before Mr. Pitt introduced the tax. I would also like to say that this limit distinguishes Easter offerings from the case of the Metropolitan of Thyateira which was in the courts recently.
In making concessions, Chancellors of the Exchequer are haunted by another consideration, namely, that the loss of revenue must be made good from some other source. The concession now sought, though important to the persons concerned, is a very small item in the national accounts. There are about 12,000 incumbents in the Church of England. On the assumption that each of them receives an Easter offering of at least £50a a year, and that this is subject to tax at the full standard rate, the loss in Revenue would be £300,000 a year; but each one of these assumptions is very much exaggerated, and in practice the loss to the Revenue would hardly exceed £150,000 a year. Moreover, it is my contention that this revenue ought never to have been collected, but we will excuse the Chancellor from repaying the back money.
There are a few incidental considerations which I would like to urge. The present law—again. "I refer to "Halsbury"—puts Easter offerings in relation to Income Tax in the same category as
tips to a waiter, permitted commissions, or presents by owners of racehorses to winning jockeys.
But there is this difference between them. When the law says that Easter offerings are liable to tax, they are taxed; but when the law says that tips are liable to tax, they are not taxed. I wonder whether the Chancellor would tell us what is the total return under the heading of "tips" in the Income Tax Returns; and if he can produce a jockey who has made a return of a present paid to him by the owner of a horse, I expect the jockey's name to be George Washington. Another consideration is that the taxation of the Easter offerings can be very easily avoided.

Perhaps I ought not to use the word "avoided," because it is no more avoidance of taxation than teetotalism is avoidance of taxation. Since we put this Clause on the Paper I have received a large number of ingenious suggestions on the subject, all absolutely watertight so far as I can see; and I personally should see no impropriety in making my gift in such a form as not to attract taxation. If the Chancellor does not make a concession that is bound to happen on an increasing scale; but I do not see why laymen should be forced to vary this ancient and laudable custom of Easter offerings, and I hope that he will concede gracefully what he is bound to lose in any case: In answer to a Question in the House, the Chancellor said that the Royal Commission on Income Tax had considered this matter and had recommended against an increase. I would point out that the Commission dealt with the subject most inadequately, in only nine lines, and the reason given would operate against all gifts of any sort—that the person who received the gift has a greater taxable capacity than the person who does not. That would apply to gifts of every kind.
I have not based this argument on the poverty of the clergy. That poverty undoubtedly exists, but it would be contrary to the interests of religion to ask for the subsidisation of clerical incomes out of the Revenue, and I do not ask for it. I ask the Committee to approve this Clause in order to remove an injustice which ought never to have been imposed. But having, as I hope, proved the justice of the case, I do not hesitate to use the poverty of the clergy as an argument for acting, and for acting quickly. These men belong to a class of whom the Chancellor observed in the Beveridge Debate:
 Some of the hardest and most cruel cases I have heard of come from that section of the community.''—[OFFICIAL REPORT, 17th February, 1943; col. 1829, Vol. 386.]
Here is an opportunity for the Chancellor to be as good as his word. We owe much in our national life to the homes of the clergy. The country parsonage, which gave us Nelson in a former day of trial, has in this war given us Lieut.-Commander Beatty, V.C., the hero of St. Nazaire, and even General Montgomery himself. The austerity of the parsonage may be a necessary part of their training, but do not let us convert that austerity into a chilling penury by unjust taxation.

The Chancellor of the Exchequer (Sir Kingsley Wood): I do not want to curtail the Debate at all, but I have to leave the Committee for a few minutes as quickly as possible, to attend a meeting that cannot avoid, and I would like to say a few words. I wish to congratulate my hon. Friend upon his excellent speech, but I confess that I thought it rather weak in logical argument. This matter has been often discussed in this House, and even in times of peace, when one could perhaps look at such matters more favourably, the proposal has been consistently rejected. My hon. Friend gave only a partial account of the history of the matter. Not only is the fact that Easter offerings are subject to taxation well-founded law, but I think it is well-founded good sense—which I agree is not always the same thing. It is worth looking at what the Lord Chancellor said when the case of Cooper versus Blakiston was before the House of Lords, when this matter was very fully considered. That was in I999, a good many years ago. The Lord Chancellor said:
In my opinion, where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office. Here the sum of money was given in respect of those services. Had it been a gift of an exceptional kind such as a testimonial or a contribution for a specific purpose as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services but a mere present. In this case there was a continuity of annual payment"—
as is the case in all these Easter offerings—
apart from any special occasion or purpose, and the ground of the call for subscriptions was one common to all clergymen with insufficient stipends urged by the bishop on behalf of all alike. What you choose to call it matters little. The point is what was it in reality. It is natural and in no way wrong that all concerned should make this gift as like a mere present as they could, but they acted straightforwardly as one would expect and the real character of what was done appears clearly enough from the papers in which contributions were solicited.
This matter has been discussed on another occasion since that case, and the same opinion was held. My hon. Friend quite rightly reminded the Committee that the matter was the subject also of careful attention by the Royal Commission on Income Tax, and that they were unable to recommend any alteration, although I have no doubt that they would be sympathetic to proposals of this kind.

Captain Strickland: When my right hon. Friend speaks of the continuity of gifts from year to year, has he given due consideration to the fact that a congregation changes individually from year to year, and that it could never be held that a gift made by A. is similar to a gift made by B. in the succeeding year, when A. has left the parish and B. has come in?

Sir K. Wood: I do not mean continuity of the same persons. I had a discussion with a clergyman on the subject only a few months ago, and he told me of his particular position, and what he was in fact getting. He quite rightly calculated what would be the average amount that he would receive in respect of the Easter offering for the particular church to which he was attached.

Mr. Driberg: There is possibly continuity within a single incumbency, but there is not continuity from incumbency to incumbency. The offering may rise or fall quite drastically according to the incumbent's popularity or otherwise, and is therefore surely a personal gift not attached to the office.

Sir K. Wood: I do not think there is any doubt that but for the office the gift, in fact, could not be made.

Mr. Ivor Thomas: Does not the right hon. Gentleman appreciate the distinction I made between the causa sine qua non and the causa causans? It is not made to the clergyman because he is a clergyman but made to a vicar because of his qualities as a man and not the incumbent of a particular parish.

Sir K. Wood: I do not accept that for a moment. It is true that a clergyman who may be more popular than his predecessor might obtain a larger sum but it is impossible to argue in fact that the gift is not given to him by virtue of the office he holds. If he did not have that office, he would not be getting any Easter offering. In all these cases, the clergyman makes an inquiry, as he should properly do, and no one would complain about that. If a certain living were offered to him, one, of the first questions he would ask would be, "What is the general amount I am likely to receive, including the sum I shall in all probability obtain by way of Easter offerings? "That undoubtedly is the case, and if you asked


any clergyman he would say that that would be the inquiry, he would put before accepting a particular living. The Royal Commission said:
While it is no doubt true that the amount of the Easter offering in any particular parish may depend in part upon the personal circumstances or the personal popularity of the clergyman, yet it is, in our opinion, impossible to ignore the plain sense of the position, which is, that Easter offerings are paid to a clergyman because he is a clergyman and only so long as he remains a clergyman. Of two incumbents, with emoluments and incomes otherwise equal, one of whom receives £100 from Easter offerings and the other nothing, to pretend that the taxability of the first is not greater than that of the second is to shut one's eyes to realities and to give undue weight to a natural sentiment.
That is a very fair statement of the position.

Mr. Thomas: We do not pretend that, but that would operate against all gifts of any character because they increase the taxable capacity of the person in receipt of them.

Sir K. Wood: No, there have been a considerable number of decisions in the courts of law which carefully distinguish between what one might call the casual gift and the contribution such as is made by a particular church in relation to Easter offerings. I have a record here of a number of these cases. Take the case of Reed v. Seymour, where it was held that the proceeds of a benefit match arranged for a professional cricketer, together with subscriptions made to him by the public on that occasion, were not taxable income. The courts very carefully distinguish between a gift given on a special occasion of that kind which is not a regular repeated gift given every year and those which are the subject of the decisions to which I have already referred.

Sir Herbert Williams: I take it then, that if we have a bazaar every five years and give the vicar a lump sum payment, he will escape taxation? It would be regular.

Mr. Goldie: Is it not the case that the professional cricketer receives a benefit match and the professional footballer does not?

Captain Strickland: Would that man have received that benefit match had he not been a cricketer? He is a popular man as well as a cricketer, but had he

not been a cricketer he would not have received it. A clergyman may happen to be popular or unpopular, but, incidentally, he is a clergyman.

Sir K. Wood: I will refer to what the Lord Chancellor said on that occasion. He pointed out that the terms of the cricketer's employment did not entitle him to a benefit; but that in practice a benefit was usually given towards the close of a cricketer's career and in order to provide an endowment for him on retirement; that except in a very special case it was not granted more than once; and that its purpose was to express the gratitude of his employers and of the cricket-loving public for what the cricketer had done and their appreciation. of his person qualities. Lord Phillimore, who was not only a distinguished Judge, but was well-known for his interest in the Church and ecclesiastical matters, devoted a very large proportion of his speech to distinguishing this particular case from the Easter offerings case. He pointed out that the Easter offering might be voluntary, but it was not spontaneous, and in the Easter offerings cases there was an element of recurrence which distinguished them from the case of a single gift to an employee. The practical distinction between the professional cricketer's case and Easter offerings is that the benefit moneys come to the cricketer on one occasion towards the end of his cricketing career and that Easter offerings, on the other hand, represent a recurring annual contribution for the personal use of the recipient. I could give instances of other cases in which this matter has been discussed.

Sir Francis Fremantle: Is not that affected by the fact that, since that decision was given, the 1919 Church Assembly Act was passed, and these offerings are under the control of the parochial church council, who may in any year say "We will" or "We will not have an Easter offering devoted to this subject"? In the case of livings which are above the poverty line that is very likely to be the case, and it is done, and does not that break the whole argument of continuity?

Sir K. Wood: If that is the case it shows more and more that it does not rest merely with the person but that the matter is taken into account by the Church authori-


ties and according to My hon. Friend is being dealt with by them. I cannot think of a more substantial example of support for the views the judges have taken than that statement, if in fact that represents the practice. If it is true that the Church authorities are now intervening and taking the money and treating it in that way, it shows more than ever that it is being dealt with and must be considered on the lines that the judges have laid down.

Mr. Driberg: I think the right hon. Gentleman misunderstood what has just been said. The Church authorities are not taking the money and applying it perhaps for other purposes. But the churchwardens can say, if it is a large living or the vicar is a man of substantial private means, that obviously there is less need to give him an actual cash present.

Sir K. Wood: If that is so, the churchwardens are now intervening and taking the matter into their hands and dealing with it as a Church affair.

Mr. E. P. Smith: Supposing the Easter offering was not given at Easter but, on the incumbent's birthday, a sum was given by the parishioners individually, would that be subject to Income Tax?

Sir K. Wood: I should certainly say so. That leads me to another point, and I am glad my hon. Friend has reminded me of it. Why Easter offerings only? Why is this taken to be an exception and a matter for special consideration as far as taxation is concerned? Take the case of the Roman Catholic Church. Very considerable voluntary offerings are given to priests in the Roman Catholic Church, apart from Easter offerings, and they include, I am informed, offerings for particular services of the ministry. In the Catholic Church there are offerings not only at Easter, but at Christmas. If you say, "I will pick out Easter offerings," it would be proper for the Roman Catholic Church to say, "If it is to be Easter offerings, we have offerings at Christmas as well, and therefore, we must have the Christmas offerings exempted." [An HON. MEMBER: There is a limit of £50."] I know, but there may be some who only get money in that particular way. My hon. Friends are optimistic if they think that if the House says it is to be £50, it will stop at that. That has

not been my experience in taxation matters. It is a proper and in fact very substantial answer to make that you cannot, if you embark on a matter of this kind, apply it to Easter offerings only. There may be some special circumstances surrounding Easter offerings but some people would quite properly say that it cannot stop there and would say that obviously it must apply to other special offerings given at Christmas, or, in the case of the Roman Catholic Church, to offerings for particular services.

Captain Strickland: Does not the Chancellor accept a fixed sum with regard to personal allowance? If you make the personal allowance so much it does not mean that it varies from year to year.

Sir K. Wood: It does very much, and if my hon. and gallant Friend were in my position he would know of the constant pressure brought upon me to vary these allowances. Therefore, my first answer is that the law is quite plain and has been laid down for a very considerable period. It is not only quite plain but very good common sense. Secondly, if you once say that there is to be a special dispensation given for Easter offerings, you cannot stop there. You cannot take the practice of a particular Church and say that in that respect only benefit is to be given by way of relaxation of taxation. You have to look at the position of other Churches who have the right to come forward and say, "If you admit the principle of Easter offerings, we demand that the same principle should be applied to other offerings given at Christmas." I would also say to the Committee that there may be Churches in which there are no Easter offerings. The ministers of these may say, "We do not go in for the practice of Easter offerings. Our stipends are paid in a different way. Why should the clergyman belonging to the Church of England receive special consideration at the hands of Parliament because the remuneration of a clergyman happens to be paid by way of Easter offerings?" That would be a most difficult position and most unsatisfactory to ministers of other denominations. I would also add for the consideration of the Committee that I do not think that to-day of all occasions—this has been objected to many times in the past—Parliament should assist this particular section of the community and give relief


by way of taxation. I think that the country would not understand it.
There is a large number of claims I have had to reject from different sections of the community which have been put forward on practically the same basis. A few minutes ago I had a telegram, evidently an echo of a by-election which is now going on, asking me if I would say why over-time should not be relieved from taxation. Well, I can give a proper answer to that as I can to this. People would say, "You are giving a special dispensation to various ministers of religion in respect of Easter offerings, but you will not give a special dispensation to workers on over-time." I have had other schemes to consider on the same basis; for instance, there was a claim which would appeal to many people—to exempt that portion of a merchant seaman's money which is called "danger money." That has a strong sentimental appeal, but if you once begin—as I explained to them and as they understood—to cut up various components of people's remuneration, you will never finish.

Sir H. Williams: My right hon. Friend has said that he could not exempt part of the remuneration of a member of the Mercantile Marine. In fact he does so, because the man is paid a substantial amount in kind, which is not taxed.

Sir K. Wood: We intend to deal with the question of kind when we come to one of the new Clauses later in the day. But that in no way affects the argument I am putting before the Committee, namely, that if one began to differentiate between different elements of, a person's total emoluments it would really be impossible to refuse others. I must maintain the position which has always been maintained in this House. In conclusion, I would like to point out that there would be difficulties, injustices and inequalities between one minister in the Established Church and another who might not have any Easter offerings. I appreciate the position of many ministers of the Established Church—I read a report of theirs the other' day in which proposals were put forward to make things better and more equal—and I would like to see an improvement in the position of many of them, but for the reasons I have given I do not think it would be fair and right to accept this new Clause.

Mr. Willink: Before the Chancellor leaves the Committee will he consider the matter from this point of view? It is really quite futile to say that the law is plain. This is a question of altering it. The law as it stands arises from the application of legal principles. This may give rise to a position contrary to the general feeling. This has been felt for decades to be repugnant to common sense.

Sir K. Wood: I stated quite definitely that not only was this the law but that it was common sense as well. I also said that Parliament has always accepted this position.

Mr. Higgs: When Income Tax was 6d. in the £.

Sir K. Wood: Yes, when it was much smaller than it is to-day. My hon. and learned Friend the Member for North Croydon (Mr. Willink) must not say that opinion has been such that this matter has caused resentment and feelings of injustice among the great majority of the people. It may be true that it has caused such feelings among a certain number of people—as we have seen in this House to-day—but for the reasons I have given I cannot make any special exemption for a certain section of the community in this respect.

Mr. Boothby: I would like to support this new Clause. Skilful and adroit though the Chancellor's speech was, it was wholly unconvincing. He did not make any attempt to deal with the principle underlying this Clause, which is a simple one, namely, are these offerings a gift or not, and are they a voluntary gift or not? If they are voluntary, they ought not to be subject to Income Tax; if they are part of the ordinary remuneration of a minister or clergyman, then they should be subject to the tax. I do not think any other point really matters. I cannot persuade myself that they are in essence anything more than a voluntary gift made by a congregation to their minister or priest as- an individual because they like him and for the services he has rendered to them personally. There is no element of compulsion about it whatsoever; there is not even an obligation. I cannot agree with the Chancellor that in these circumstances you can describe these annual gifts as emoluments apper-


taining to a particular office or Church. The Chancellor himself made no attempt to deny that they vary greatly in amount from year to year and from individual to individual or that congregations also vary greatly at the same time. There is nothing permanent about these annual gifts except that they take place annually. If they were made more sporadically, every two years or every two and a half years, and at a different time from Easter, I am not at all sure that they would be subject to Income Tax.
If a gift to a clergyman or minister of religion is used for the specific purpose of taking his family to a seaside or purchasing a motor car, I understand that the gift is not subject to tax, but if it is used to implement the exiguous salaries paid to the vast majority of clergymen in this country in order to help pay for the bare necessities of life, what do the Treasury do? They come along, take half the money out of the plate and pocket it. There might have been something to be said for that when Income Tax was 6d. or 9d. in the £, but there is nothing to be said for it now, when Income Tax is 10s. in the £ I do not believe that many members of congregations fully realize that 10s. in the £ is taken from their gifts by the Chancellor. I am sure that if this question was left to an open vote, we should get a close vote, because there is a strong body of opinion that does not think it right that this should happen. I cannot think it is right to take money from men who are clearly overworked and underpaid and turn what is a thank-offering into a commercial proposition. That is what the Treasury is doing now. The Chancellor, in his speech, quoted the law as laid down by Lord Chancellor Loreburn. But he expressed his views in 1909, when Income Tax was 9d. or a 1s. in the £ At any rate, if we think it is not right, we are perfectly entitled to alter the law. Even if nothing can be done on this occasion I hope the Financial Secretary will give the Committee an assurance that in view of the anxiety which is being expressed this whole matter will be carefully considered between now and the introduction of the next Finance Bill.

Mr. Moelwyn Hughes: I rise to express the hope that the Government will not accept this new Clause.

There is no class of people in this country who do such a considerable amount of valuable work as clergy and members of the ministry, and they do it for very' little pay. If by any means their position could be eased, I should be only too glad to see it done, for I know something about it, because my father was a minister. We have been using legal terms in this discussion, but looking at this matter from a common sense point of view these- gifts are collections of money given in order to maintain and assist the ministry at a particular church. It is not only on Easter Sunday that the collection plate is passed round for the minister in Nonconformist churches. The whole of a Nonconformist minister's livelihood depends upon an accumulation of offerings, spreading from Sunday to Sunday. They are all gifts. There is no compulsion to make them—I am quoting from arguments used in favour of the Clause—and they vary from chapel to chapel. There is no constancy about them. The minister's salary is not a fixed salary.

Mr. Ivor Thomas: Almost every Nonconformist minister is paid a fixed salary. It is true that it is received in the form of gifts which may exceed the amount, and then it is diverted to some other purpose. I cannot defend the idea that a person should receive all his income in the form of gifts, because that would mean evasion of taxation.

Mr. Hughes: I was just about to point out that, although most Nonconformist ministers go to a chapel with the figure mentioned, that figure is not final. I know plenty of cases where the accumulated offerings of the year and the collections towards the ministry are always kept distinct from other collections and if the accumulated Easter offerings exceed the amount that has been mentioned more has been paid. I know cases of ministers who have had year after year to accept less, because, owing to altering conditions of population or whatever it may be, the accumulated offerings have not come up to it. To describe a minister's remuneration as a salary, and to regard it as something equivalent to a commercial contract, is to make a vast mistake. What a minister gets is an accumulation of Easter offerings. If the principle contended for by the Clause


is right, no Nonconformist minister should pay a penny of Income Tax. [Interruption.] If the principle justifies the £50 in the one case, it justifies the whole of the offerings in the, other. Nonconformist ministers are probably a saintlier body of men than we here, but they are not in my experience quite so saintly that they like to pay any more Income Tax than is necessary. But in fact they do, and although they do not desire to pay taxation any more than anyone else, I am glad to think that I know of no body of Nonconformist ministers who have ever approached the Chancellor of the Exchequer with the request that they should be completely exempt from paying their share of tax on the ground that all that they receive comes entirely from free and voluntary gifts. On that ground alone, and not because I wish to deprive a worthy body of men of any concession, I resist the Clause.

Mr. Higgs: I have very great respect for the Chancellor of the Exchequer, but I do not think he ever put up a worse defence. He referred to the legislation of 1909, and my hon. and learned Friend the Member for North Croydon (Mr. Willink) said, "We know the law. We want the law altered." The Chancellor will not have many friends in this matter. He referred to Christmas offerings and so forth, but there is a £50 limit in the next Clause. We are appealing for these people, who comprise the worst paid members of any profession. They have no trade union. The clergy are human, and they want material comforts. They are not in a position to increase their remuneration, as other sections of the community are. Prices are rising, but they are receiving no consideration whatever. The Clause is not tabled solely on behalf of the clergy of the Church of England. It is for all ministers of religion. A career in the Church in any case is a black outlook from the financial standpoint. While people in other walks of life have opportunities of supplementing their income by other forms of employment, that opportunity does not arise for the clergy. The Chancellor made a great point that it would be creating a precedent if he granted this concession. Does he suggest that there are no anomalies at present in the laws of taxation? I cannot see his argument. If all ministers of religion were taken into account, the cost to the Exchequer would not exceed £500,000.

Mr. Ivor Thomas: It would not be anything like that, because, even if Nonconformist ministers availed themselves of it, it is not money that is now going into the Revenue. The total cost to the Revenue would not exceed £150,000.

Mr. Higgs: I hope the Clause will be taken to a Division, and, if we do not carry it, it will be defeated by Members in the smoking room who are not familiar with the problem. I appreciate that the Chancellor is paid to look after the public purse, but to refuse this concession is niggardly. A lot of people who contribute to Easter offerings and so forth are not aware that half of it goes to the Chancellor of the Exchequer.

Mr. Butcher: I think the Chancellor's arguments were completely irrelevant. He told us accurately what the law is, but the whole purpose of this House is to look at the laws that we have and, if we do not like them, to change them. In regard to the remuneration of the clergy, that has been done twice since 1909. Two Tithe Acts have been passed in the intervening period, both of which reduced the remuneration received by the clergy. I think the Chancellor entirely fails to appreciate the position that the ordinary men and women who want to pay a token of respect and regard to the clergy of any denomination are equally anxious that the Chancellor shall not get a 50 per cent. rake-off, and we are moving this Clause to make sure that, when it is said that a collection will be taken on behalf of the incumbent of the parish, it means what it says and it does not mean that a collection shall be taken on behalf of the Chancellor of the Exchequer. I hope this will be taken to a Division.

Sir H. Williams: The Chancellor of the Exchequer told us that this has been frequently discussed, but I think he is inaccurate. The last discussion was in June, 1925. On that occasion my hon. Friend was in the opposite Lobby from me, because I voted against the Government and he supported it. I welcome him as a sinner come to repentance. The Chancellor's speech was about the worst that he has ever made. There was only one worse, and the hon. and learned Gentleman who made it has left the Chamber to have a meal. Some of us know how badly many ministers are fixed. I was a churchwarden for some years at a church


a mile away from here, and I know something about church accounts. If I were a churchwarden to-day, I could get round it without the slightest difficulty. There are dozens of methods. It is a pity that Church authorities and the clergy should be asked to adopt methods for the avoidance of taxation, but it is only necessary to present a piece of jewellery to the vicar's wife and she has only to take it to the jeweller and sell it. It is a perfectly legal transaction. Or they could arrange to buy the vicarage grocery, or they could do as the Archbishop of York has done. His stipend is £9,000 a year. He has arranged with the Ecclesiastical Commissioners to pay the whole maintenance of his office and his castle, and is in future to receive a salary of £4,250 subject to taxation: He and the Ecclesiastical Commissioners have gone through a delightful process for the avoidance of taxation. [An HON MEMBER: "Not avoidance of taxation, but of Surtax."] The Archbishop will pay less in future than in the past. I do not blame him. I think the transaction perfectly honourable. But it contravenes the moral principle of Section 35 of the Finance Act, 1941. I hope it will temper some of the speeches the Archbishop makes in future in discredit of other people. His Grace of York is now travelling in bad company, it seems to me. It is a week-end competition who can talk the most economic nonsense.
Why continue this injustice? Robin Hood was much more respectable. Here you have the Chancellor robbing the poor. Anyone who has taken the plate round on an Easter Sunday knows that the poorest members of the congregation make an extra effort to contribute. Those who as a rule put a penny in put 6d. in on Easter Sunday, and, of their extra effort, a half is taken by the Chancellor. I think there is an overwhelming case for this Clause. The Chancellor's speech had no relevance to it. This is not a payment in respect of a contract of service. When we last discussed this, Colonel Guinness, now Lord Moyne, was Financial Secretary to the Treasury, and he put up the Government case. You can find most of the Chancellor's, speech to-day in Hansard for June, 1925, in the words of Colonel Guinness. He was so ineffective that he could not convert his own brother, who went into the Lobby against him. On that occasion the only reason why the

Government won was that the people who had not heard the Debate flocked 'in to the Government Lobby. It is those who vote blind on these occasions who are the salvation of the Government in their difficulties, as the Government are at this moment in difficulties. One speech in their support was so inconsequential and irrelevant that as soon as the hon. and learned Member had delivered it he left the Chamber as though he could not bear to hear the echoes of it.
The Financial Secretary is a great ornament of the Church Assembly, and he makes eloquent speeches there. He is the admired of the bishops and the lower orders of the clergy. Surely he is not going to make his presence in that Assembly in future almost impossible by forcing them to point the finger of scorn at him and say, "That is the man who robbed the children's money box." I hope he does not want to go down to fame as the man who, in the absence of the Chancellor of the Exchequer at some important gathering, had to do this really dirty deed, because honestly it is a miserable thing he is asking of us. I hope that he will repent as the hon. Member for East Aberdeen (Mr. Boothby) has repented. He did not sin last time, because he was not here. If he sins to-day, it will be the first time.

Sir Frank Sanderson: I support this new Clause if for no other reason than that the tax on these offerings is unjust in its incidence. It penalises the poorer parish against the more wealthy parish. In the poor parish the only method by which the vicar receives his Easter offering is by the coppers and silver which are dropped into the collection plate. On this the vicar derives no benefit in taxation relief. In the larger and more wealthy parishes it is well known that it is the custom not to put the Easter offering in the collecting box but to send it direct to the vicar in such a way that it is not subject to. Income Tax. Therefore, as the law now stands we are penalising the poorer clergy as against the wealthier ones. If for no other reason than that we should not penalise one section of tile clergy against another, I support this new Clause.

Mr. Hannah: I did not want to interrupt the Chancellor when he was speaking, because so many people were doing that. It seems to me that the Chan-


cellor's speech will almost certainly be historic in making an excellent suggestion to the Church. The only thing that has to be done—and it is an exceedingly English solution—seems to be to change the name. Instead of calling this thing an Easter offering, the Church has only to make a gift to the vicar or rector for the purpose of repairing his residence, educating one of his children, helping him to take a holiday or something of that kind, and no tax will be payable. There is an unfortunate tradition in this country that nobody can be a Minister of the Crown whose voice can be heard more than 10 yards from where he is standing. The result to-day was that I did not hear everything that the Chancellor said. I would like to know, therefore, whether the whole matter cannot be satisfactorily got over in the way I have indicated, that is, by giving the vicar an offering for some particular purpose. I might draw the Chancellor's attention to the widow's mite. It is rather unsatisfactory that part of such very small gifts should be taken by the Exchequer.
I wish we could have had it made clear how the nonconforming Churches stand in this matter. I can only say that when I was born I had no fewer than seven relatives in holy orders. I have three sons, and two of them are clergymen. How I survived I do not know, but I did survive somehow or other, and I am much more familiar with the financial arrangements of the Church of England than those of the nonconforming bodies. We should have had made perfectly clear how this new Clause would affect them.

Mr. McKie: I should like to point out to my hon. Friend that there is another established privileged Church in Scotland which observes no Christian year and in which there is no system of offerings to the clergy such as the Easter offering.

Mr. Hannah: I am quite familiar with the arrangements of the Church of Scotland. I am in the position of having to pay part of the salary of a Church of Scotland minister, though I am not a member of that Church.

Mr. Ivor Thomas: As I was brought up as a Nonconformist I can give the hon. Gentleman the information he requires about the Nonconformist Churches. The Free Church ministers are paid salaries on a contractual basis, and these salaries

are raised by the gifts of the congregations. I have no doubt that if this new Clause became law the Nonconformist Churches would make a practice of taking an Easter offering so that ministers might avail themselves of these benefits, up to £50 a year.

Sir George Schuster: I should not have intervened except for the fact that the Chancellor of the Exchequer seemed to be basing himself on what he thought to be the opinion of the Committee. I should like, therefore, to express my opinion. First, I want to record the view that it is a mistake to accuse the Chancellor of stinginess in a matter of this kind or to ask him to be generous. The Chancellor cannot be generous with other people's money; he is merely trying to do what is the right thing. I want to support this new Clause because I feel that the existing position is unjust and contrary to the public interest. I am not arguing it as a matter of law. I will try to express what is in my mind about it in this way. The Church, according to the law, can be regarded as a subject for a charitable gift. If I were to contract to pay to the Church a sum for seven years, it would escape all Income Tax. Therefore, if I, as an ordinary Income Tax payer, contract to pay to the Church £1 a year from my taxed income, the Church will get an income of £2 a year. On the other hand, if I put £1 into a church plate for the Easter offering the incumbent will get only 10s. It seems to me that there must be something wrong in that enormous difference. It will be argued that I have not made the placing of £ into the plate for the Easter offering the subject of a seven-year covenant. On the other hand, the whole of the Chancellor's argument was based on the fact that somehow or other the incumbent is receiving the benefit of a contractual obligation in taking the Easter offering. I feel that somehow or other there is something wrong about it. Of course, if my contributions under a seven-year covenant to the Church were used to pay a definite agreed salary to the incumbent, he would have to pay Income Tax on that. But then at least he would get £1 out of the £1 I gave out of my taxed income. At present he gets only 10s.

Mr. Benson: I do not quite follow my hon. Friend's argument


that if under a seven years' contract he gave £1 the incumbent receive £1. Surely he would receive £1 less tax?

Sir G. Schuster: My argument was that if I contracted to pay £1 a year out of my taxed income, the Church would in fact get If it used that £2 to pay a regular salary to the incumbent he would get £2 gross, from which if he was a full taxpayer he would get £1, less tax. I need not follow out now the full logical consequences of these considerations. It is enough for my present purpose to say that the net result creates in my mind the impression that a great injustice is being done. As I also feel that in the public interest it is desirable to do something to improve the position of the wretchedly paid clergy, I put my name to this new Clause, and I propose to vote for it.

Professor Savory: I am sure the Committee greatly appreciates the learned and eloquent speech made by the hon. Member for Walsall (Sir G. Schuster), who put forward clearly the difference between a contractual obligation and a voluntary offering. That distinction was also suggested to my mind by the speech of the hon. Member for Carmarthen (Mr. Moelwyn Hughes). He laid stress upon a point which in a great many churches is not applicable. He said that in the case of Nonconformists, their offerings being voluntary, they made an Easter offering every Sunday in the year and therefore no difference could be made between the usual Sunday offering and the Easter offering. The hon. Member may know Wales, but he does not know Northern Ireland. My hon. Friend the Member for Galloway (Mr. McKie) may speak for Scotland but I challenge his right to speak for Northern Ireland. In our churches there we have every Sunday a little paper bag which is numbered and dated. We contract that we shall put in, say, half-a-crown every Sunday. That is a definite obligation. When it comes to Easter, in addition to putting the half-crown into the little bag for that Sunday, we make a voluntary offering for the clergy. Is there not an immense difference between the contractual obligation to pay every Sunday and the purely voluntary gift which we make to the clergy on Easter Day?
The point which moves me in this matter more than any other is that we

have heard over and over again of the immense rise that has taken place in the wages of certain members of the working classes, for instance of those engaged in munition factories and those employed in aerodromes. In fact cases have actually come before the court of people who have been brought up for being drunk and disorderly. I remember a magistrate saying to a man who was little more than a boy and was earning £7 a week, "You must be working in a gold mine." The clergy are not working in any gold mines. They have not had their stipends raised on account of the increase, roughly amounting to 90 per cent., of the cost of living.
In the North of Ireland we have in our Church a rule that unless the congregation can guarantee £400 a year, the clergyman shall cease when a change in the incumbency takes place to have the title of rector. It is with very great distress that I have seen a number of clergymen who formerly would have been rectors reduced when the living became vacant to the status of curates in charge. That is not due to Any lack of generosity ,on the part of the people. It is due to the fact that there has been a very large migration from the country into the towns. The clergy who bear an enormous increase in the cost of living and an enormous augmentation in Income Tax have not, so far as my experience goes, had their ordinary stipends raised. I think the Chancellor should bear in mind that a clergyman has to meet a great deal of expenditure on obligations which do not fall upon the ordinary individual. A clergyman with whom I was intimately acquainted—he was my own father—was expected in accordance with the custom of the parish to provide out of his own pocket the entire cost of the Sunday school treat. Would the Chancellor of the Exchequer have allowed him to deduct that considerable sum for Income Tax purposes? It was, further, the custom that at Christmas time the clergyman should give a piece of beef to all the old people. Would he have been allowed to deduct that for Income Tax purposes? The clergy are in a very peculiar position in this respect in having to meet a great many charges which the ordinary layman does not have to meet.
When pressure is brought to bear by a large part of the electorate, the Chancellor of the Exchequer makes such enormous concessions as he did last year when


influence was brought to bear upon him to exempt from Income Tax a large part of the sum earned by married women. He did that at a cost to the Exchequer of £25,000,000. According to my hon. Friend on my right the concession we are asking for will cost a bare £150,000, but the clergy are a very small part of the electorate and cannot threaten to change the course of a by-election which would disturb the mind of the Government., But are they any the less worthy of consideration on that account? Should not the Chancellor of the Exchequer, a fair-minded and just man, take into consideration this very deserving class? I should be very sorry as a representative of one of loyal Ulster's constituencies to have to vote against the Government, but I feel so strongly on this matter that I hope my hon. Friend the Member for Keighley (Mr. Ivor Thomas) will carry his new Clause to a division, when I shall certainly give him my support in the Division Lobby.

Sir Stanley Reed: I hope that my hon. Friends will carry this Clause to a Division, when I shall unhesitatingly go into the Lobby with them. I shall do that with no disrespect to my right hon. Friend the Chancellor of the Exchequer, but really with a lingering sense that I am doing him a justice and a kindness. I join with those who say that as Chancellor of the Exchequer he has no option but to take the view which he has taken on this matter, and if I criticise the rather strained arguments which were used in support of that attitude, I feel convinced in my own mind that he did not like the task which was thrust upon him in his capacity as Chancellor. Therefore, if there is any chance of this Clause being carried I think no one will be more pleased than the Chancellor himself. But I support the Clause particularly for a reason which was given, but which has not been developed in the Debate, by the hon. Member for Ealing (Sir F. Sanderson). There are a dozen ways of getting out of paying or thrusting upon the incumbent the paying of this tax. It is not the large contributions which pay the tax. Anybody who can afford to give a note to the vicar at Easter time so that the vicar has to pay tax on it is either ignorant or foolish. It can be done and is being done, and I hope always will be done. As the hon. Member for Ealing said, this tax is really a tax on the sixpences and shillings, and not on the five-pound notes,

and I think it is wholly wrong that we should be forced into practices which are perfectly legitimate but which are slightly irregular in order to get behind a gross injustice. Therefore, I shall do my very best to render the greatest service I can to the Chancellor by voting for this Clause, and an equal service, I hope, to the Financial Secretary, because I feel it will be the sorriest hour of his life when he gets up to attempt to justify the unjustifiable and to inflict a burden which he knows in his heart should not be inflicted and which he would like himself to see swept away.

Mr. Ralph Etherton: Much has been said by many hon. Members about those for whom all of us must have very much sympathy. I think it was the hon. and learned Member for North Croydon (Mr. Willink) who said that we all know the law and if the law needs to be changed it was for Parliament to do it. That is, of course, a truism, but I hope Parliament will not decide to change the law unless there is a logical and proper case for a change, and I venture to think that if this matter is examined dispassionately, however much our sympathies may be with the clergy, we cannot but come to the conclusion that the law as it stands is proper and just. After all, the Easter offering is a normal emolument which comes to the clergy in the ordinary way of their business as clergy, and I cannot see the logic of providing a special exemption for this particular part of their emolument. If we are to exempt this part of their income we are creating a new anomaly. It has been said that the clergy are badly paid, and that is well known, but it has also been said that they pay 10s. in the £ tax on these Easter offerings, but in most cases that is quite untrue. The Easter offering is part of their ordinary income, and as such is subject to the ordinary deductions which normal income attracts, and so far from paying 10s. in the £ on Easter offerings they pay considerably less than that unless their income if married and with two children exceeds approximately £450 a year.
Let us examine the matter in a logical way from the start. In the first place they get a deduction of 10 per cent., as does everybody else for earned income. Then a married man gets the deduction of the first £140, and a further £165 is taxed only at 6s. 6d. in the £ If he has two


children he would get a further allowance of £100. Thus, until his income reaches approximately £240 it would not be attracting tax at all, so that it is quite idle, if I may say so with great deference to hon. Members, to try to excite sympathy on the ground that this Easter offering attracts Income Tax at 10s. in the £ In the case of a married man with two children it will not do that until his income exceeds £450. Bearing all those considerations in mind, while we may have great sympathy for the clergy we should treat this matter in a logical way and not exempt from tax a particular portion of a clergyman's emoluments when everyone else in the country is taxed in the ordinary way on the whole of his income.

Major Gates: I should have to oppose this Clause, for the following reason, that although I have been in complete sympathy with the speeches in support of it so far, I doubt very much whether the Clause carries out the desires of those who are supporting it. The Chancellor is maintaining, and the hon. Member for Stretford (Mr. Etherton) is maintaining, that the Easter offering is a normal emolument. I deny that, because it has never been a normal emolument with me. I never subscribed to the little bag to which reference has been made. The clergy are my friends, and I go to them quite frankly—Easter is generally the time to do it—and say, "I want to give you my sincere casual gift in token of the magnificent work you have done during the last year. I am not going to put anything into the bag, because I have no desire to make a casual gift to the Chancellor of the Exchequer." I am quite sure that if congregations knew they were making a casual gift to the Chancellor of the Exchequer, they would not do it, and it is one of the dangers of this Debate that now that the matter has received publicity they may not contribute as they Dave done. If the Clause is pressed to a Division and if it were a question of "Do you sympathise with the clergy or not?" naturally I should vote with the "Ayes," and I am sure that if I make a casual spontaneous gift to somebody that is not liable to taxation, but I would ask the hon. Member for Keighley (Mr. I. Thomas) whether the reference in the Clause to a maximum of £50 means that I can never give anybody more than £50.

Mr. Thomas: In that case only the first i5o would be exempt from tax. On the more substantial point, if there are any legal flaws in the Clause there need be no difficulty about that, provided the Chancellor is prepared to accept it, because between now and the Report stage he could no doubt get a form of words which would be suitable to his advisers.

Major Gates: That is my point I want to support the principle that we may continue making our free gift to our good friends the clergy without the Chancellor of the Exchequer putting his hand in the plate, because that is repugnant to us, and I think the whole Committee are agreed that it must stop. I hope that the hon. Member will not press this matter to a Division, because I do not think I could support his Clause in its present form with the maximum figure of £50;. We have heard that Nonconformist clergymen are paid almost entirely by gifts, and their taxable income would start at £50 if the Clause were carried. If we are to challenge the Chancellor to a Division, I would like to have a slightly differently worded Clause before I could follow the hon. Member into the Lobby.

Lieut.-Commander Joynson-Hicks: I feel I ought to apologise. to the Committee for intervening in this Debate, as my duties elsewhere have prevented me from being present during the whole Debate, but I feel very strongly on this point. I am anxious, if possible, to support the proposed new Clause and to encourage the Mover to press for a Division upon it, if necessary. I think we all agree with what was intended by my hon. and gallant Friend who has just sat down, but I cannot agree with the conclusions which follow from his argument. If we are to achieve any relaxation of the present law on this subject, the only way we can do it is by pressing for a Division when opportunity is offered. I gather that the appeals which have been addressed to the Chancellor of the Exchequer have not shown evidence so far of being successful. I am certain that he would be the first on personal grounds to wish to alleviate the hardships which this additional tax causes to the most poorly paid professional class in this country; but, on the other hand, it has already been pointed out that the relaxation for which we are asking would result in only


a very insignificant diminution of the national income.
Upon that ground I feel that the proposal should appeal to the right hon. Gentleman to a very great extent. By sacrificing such a very small diminution of the national income he would please and give hope and confidence to a very wide circle of people, very much wider than the circle of people who would actually benefit. There is not the least doubt that, since it became known that Easter offerings were subject to tax, it is a matter which rankles in the hearts and consciences of a great number of people who feel that it is fundamentally wrong that voluntary offerings made in church should be subject to taxation. It may be right or wrong, but I submit that that fact is there. I understand that the right hon. Gentleman has said that that is the law, but it is worth pointing out that it was not realised until comparatively recently that that was the law. The effect of the law is of quite recent origin.
I would point out another aspect of the matter which might commend itself to the Chancellor. Most relaxations of the law are really the thin ends of wedges. They open wide the doors to appeal for further relaxations in favour of other parties. I do not think that argument can be used in this case. The present proposal is not the thin end of a wedge at all, because if this relaxation were granted there is no other professional class who could argue that they also ought to have the benefit of it. It is the law, but it is inadvertently the law, and it has been found by many people to be repugnant to the national conscience at the present time. Therefore I submit that it is up to us to take cognisance of that fact and press for the law to be amended or annulled in the only place in which that step can be taken. This is the time and the opportunity to do so.
My final word is with regard to the utterance which has recently been addressed to the Committee stating that it is not the standard rate of tax which is necessarily suffered by incumbents and other clergy in this matter. In so far as it is correct—and it is mostly correct—it is a strong argument in favour of the relaxation. It means that all those people are already so poorly paid that they do not receive what the Chancellor considers upon financial grounds to be a standard rate of income. If the law could be

amended it would bring great relief to a great number of people. The only argument I can see against the proposition is that the whole method of increasing the income of the clergy by Easter offerings is wrong, but that is not a view to take on the present occasion. Easter offerings are an ancient and honourable custom, and a Christian custom, which this Committee would do well to recognise. I hope that the Committee will take cognisance of it and recognise it, if necessary by pressing this Clause to a Division.

Mr. Benson: I do not think that my hon. Friend the Member for Keighley (Mr. Ivor Thomas) has helped the Church by raising this matter or that the way in which hon. Members have conducted the Debate in favour of the Clause has added to the dignity of the Church. The Committee has agreed—or at least there was a murmur of assent—when it was stated that the legal interpretation of the position on Easter offerings was correct, and that they were income, [An HON. MEMBER: "No."] Certainly. It has already been settled by the highest tribunal in the land. The point to be established before the proposed new Clause should be accepted would be, Why should a regular annual sum of money, which is admitted and decided as income, be free of tax merely because it is contributed in a certain way? The hon. Member who last spoke suggested that it rankled in the consciences of churchgoers that the small incomes of the clergy should be taxed 10s. in the £ The best method of dealing with that problem is to raise the salaries of the clergy rather than trying to get a tax concession. For what reason should a clergyman of the Church of England get a tax concession just became his salary is low?

Mr. Boothby: The hon. Member seems to accept it as axiomatic that this Committee has to accept the decision of the House of Lords upon what is income. Our case is largely based upon our view that Easter offerings are not income.

Mr. Benson: There is no appeal from a decision of the House of Lords. We have to accept it. [HON. MEMBERS: "No."] This House can pass a law to exempt Easter offerings, but until it has done so they remain income. Nobody, in reality, has disputed that they are income.

Mr. Ivor Thomas: I dispute it. If Easter offerings were given to the incumbent in the form of War Savings Certificates they would be capital, and would escape taxation.

Mr. Benson: I am afraid that my hon. Friend is entirely wrong in his law. If incumbents were paid with War Savings Certificates, payments in kind or any other way which had a cash value, those payments would be income.

Mr. Thomas: No.

The Attorney-General (Sir Donald Somervell): Apart from the question which is raised by a later Clause about board and lodging, money's worth is treated at its worth as income, just as much as money. You could not avoid the payment of Income Tax merely because you got your employer to pay you in War Savings Certificates.

Lieut.-Colonel Acland-Troyte: Does that mean that if I give my parson a dozen eggs for breakfast he has to pay Income Tax on them?

Lieut.-Commander Joynson-Hicks: We are here dealing with Easter offerings and not with household sustentation.

Mr. Benson: It does not matter what you put into the Easter offering. If it is possible to turn it into cash, it is income. As a matter. of fact, hon. Members have been pointing out that Easter 'offerings' have been a source of income, not since 1909 only, but for hundreds of years. It is no use quibbling. If Easter offerings are not income, why have hon. Members not the courage of their convictions? Why do they not propose to exempt the whole of the Easter offerings from taxation? Why put in the limit of £50?

Captain Strickland: Suppose a parson made himself very unpopular on the Sunday before the Easter offerings, and no, Easter offerings were put in; could he sue on that? If he could not sue, it is not income.

Mr. Benson: A barber cannot sue on his tips, but they are income and are taxable.

The Áttorney-Genera: A barrister can- not sue for his fees.

Mr. Benson: I thank the right hon. and learned Gentleman very much for giving me that information.

Mr. Thomas: The real analogy is with the fees that the clergyman receives for churchings, marriages and funerals. The Easter offerings are in a quite different category. We put in the limit of £50 to prevent abuses.

Mr. Benson: If Easter offerings are not income, it is no abuse to exempt the whole amount. As a matter of fact, the £50 limit shows a bad conscience on the part of the hon. Member for Keighley arid other hon. Members who are trying by tax concessions to subsidise parsons wages because those wages are low. [HON. MEMBERS: "No."] Certainly.
Anyhow, it is obvious that we cannot reach agreement on this point. I think some of the suggestions made have been most undignified. Hon. Members have said, "Well, we can get round it this way. We can add parsons of the Church of England to the body of tax dodgers who use questionable means of avoiding taxation." [HON. MEMBERS: "No."] Most certainly. Member after Member has got up and said that. The hon. Member for Aylesbury (Sir S. Reed) said, if I remember. rightly, that his £5 was not taxed and was not going to be taxed. Other members have suggested one way and another way, and there has been right through that undercurrent of suggestion that if the Chancellor does not give way, other methods will be adopted to. make up the parson's salary without making it liable to tax.

Mr. Butcher: Is it not a fact that there is a legal decision that a man has a right so to arrange his income as to attract the smallest amount of tax?

Mr. Benson: That is perfectly true, and that is a dictum which has been condemned and held up to contempt in this House every time it has been quoted. I am astonished that it should be quoted by someone, apparently a member of the Church of England, who is supporting this Clause. That is the very attitude I am complaining about, that you are attempting to increase the salaries of clergymen in the Church of England and using as an argument all the arguments that the tax dodgers use, and even threatening tax dodging.

Mr. Butcher: Why should it generate so much heat when I quoted one judgment?

The Deputy-Chairman (Mr. Charles Williams): We have had a very long


Debate on this Clause. There is a good deal of Business to do, and I think that if one Member at a time made his speech and finished, it might be batter.

Mr. Benson: I have not much more to say. The hon. Member asked me why so much heat is generated. Is he not aware that it is traditional in this House that anything which attaches to clerical and religious matters invariably generates heat. We have passed sums of thousands of millions in Votes of Credit with three, four or five Members sitting here. Here is a little trifling question yet we have at least 50 Members here. Of course heat is generated. I am protesting vigorously against this atmosphere, against this attitude of tax dodging. Although I am not a member of the Church of England, I object to this undignified kind of argument, which is an attempt to blackmail the Chancellor, coming from members of a religious body which ought to support a more principled attitude towards the Exchequer and taxation.

Sir William Davison: The acceptance or rejection of this Clause depends upon whether or not Easter offerings are income, that is, are a regular source of income to the clergymen. Earlier in the Debate the hon. Member for St. Albans (Sir F. Fremantle), who was sitting below me, asserted that under the Church Assembly Act power was given to the Church authorities that in the case of clergy whose income was considered adequate it would be in the power of the Church authorities to ask them to pay over part of their Easter offerings. If that is so, I would be glad if whoever is going to reply would say whether there is some such provision in the Act referred to, for if there is a provision of that kind in that Act it is surely conclusive that Easter offerings must be considered as forming part of the clergyman's income. Therefore, it seems to me if that is so that the argument of the Chancellor is a very strong one, and is supported by the Church authorities themselves.
The other matter to which I would like a reply is that the Chancellor in his speech said that the law as regards gifts to the clergy, was quite clear and established, and that if we exempted income up to £ 50 in the case of Easter offerings from taxation, it would be necessary to exempt gifts given to clergy or ministers at Whitsuntide or Christmas, as is the case in

certain other denominations. Do I understand from that that all gifts to a clergy. man are to be considered as liable to Income Talc? Supposing a clergyman gives a very good set of Whitsuntide addresses and two or three of his parishioners say, "That was a splendid set of addresses which the rector gave. He is not very well paid. We should like to give him a little present," and they collect £15 or£20 and hand it over to him as a present. Is that subject to Income Tax or is it not?

Mr. E. P. Smith: I put a very similar question to the Chancellor earlier in the discussion, and asked him whether gifts given individually to a priest or minister on his birthday by members of his congregation would be liable to Income Tax. He answered me in the affirmative.

Sir K. Wood: We must not be under any misapprehension. I would like before I gave an authoritative reply to look at the facts in each case.

Whereupon The GENTLEMAN USHER of the BLACK ROD being come with a Message, The CHAIRMAN left the Chair,

Mr. SPEAKER resumed the Chair.

Orders of the Day — ROYAL ASSENT

Message to attend the Lords Commissioners.

The House went; and having returned—

Mr. SPEAKER reported the Royal Assent to:

1. Consolidated Fund (No. 3) Act, 1943
2. War Damage Act, 1943.
3. Housing (Agricultural Population) (Scotland) Act, 1943.
4. Sunderland Corporation Act, 1943.

FINANCE BILL

Again considered in Committee.

[Mr. CHARLES WILLIAMS in the Chair]

NEW CLAUSE.—(Easter Offerings.)

Question again proposed, "That the Clause be read a Second time."

Sir K. Wood: I would just like to complete what I was saying. I think that the test in all these cases must be whether


the money is really paid in respect of or by virtue of the office which the person holds, or whether it is in fact given to him personally, and apart from that office altogether,

Sir W. Davison: I would like the two points that I raised before the interval to be definitely settled. I do not think the Chancellor quite answered them. My first point was in support of the Chancellor's contention that if Easter offerings are treated by the church authorities themselves as part of the clergyman's income, it seems to me that there is no question that they are liable to taxation. The other was, is there to be a special bar put on the clergy receiving all gifts, apart from Easter offerings? The Chancellor said that he could not exempt Easter offerings and continue taxation on offerings at Christmas or Whitsun. But, as I said just now, suppose a clergyman gives a very able series of addresses in church or lectures in his school house, and a number of his parishioners feel that they would like to make a present to enable him to go to the seaside for a week or for some other purpose. Is that present taxable, because the money is given him in respect of something done in the course of his employment? The Chancellor says that the matter is a plain and well-established one, but I think it bristles with difficulties. It seems to me that clergymen are placed in a worse position than other people. Other officials can have casual gifts made to them without being liable to Income Tax in respect of such gifts. Surely it should be possible to make presents to clergymen not annually, but for good work in their parishes, without those presents being liable to taxation?

Mr. Denman: Perhaps I might be allowed in a few sentences to express my great regret to the hon. Member for Keighley (Mr. I. Thomas) that I cannot support this Clause. I suppose I have spent more time than most Members of this House in furthering the material prosperity of the clergy, and I would gladly support anything I could with that object. The reason why I cannot support this Clause is quite simple. The Church would not welcome what would be regarded as special privileges which are not granted to other people. I see much harm to Church work arising from the allegation, however unfounded

it may be, that the Church enjoys economic privileges. It would be a profound mistake, by this Clause, to add fresh fuel to that particular fire.

The Financial Secretary' to the Treasury (Mr. Assheton): Several hon. Members have referred to the fact that I am myself a member of the Church Assembly. I should like to tell the Committee what my position is. I am a member of the Church Assembly, and was for many years a member of the Central Board of Finance of the Church; so I have a certain amount of experience in matters of this kind. When this Clause first appeared on the Paper I examined the matter very carefully indeed. I am aware that several hon. Members have stated the position very clearly so far as the law is concerned. My hon. and learned Friend the Member for North Croydon (Mr. Willink) made some point of this: "We all know what the law is; what some of us want to do is to get it altered." It is admitted that this is the law, but the question I want to address myself to is, whether it is just. I think it is just.

Mr. Willink: In one of the most recent cases the Judge said that he very much disliked to have to decide the case in a way which the decision of the House of Lords forced him to do. I have the case here. It was in 1931.

Mr. Assheton: The Committee will appreciate that I have not had an opportunity of studying the particular reference which my hon. and learned Friend made, but I address myself to the question of whether this law is just. Every member of a congregation who contributes to the Easter offering knows that it is to supplement the income of the clergyman. The next point is this. There is very little doubt that on such an occasion the clergyman is receiving the gift by virtue of his office. He would not be receiving that gift if he were not the clergyman of that parish. My hon. Friend the Member for East Aberdeen (Mr. Boothby) said that the Board of Inland Revenue is putting its hand into the plate and taking out what belongs to somebody else. My hon. Friend went on to suggest that if Income Tax was only 6d. in the £ it would not matter. I do not see the logic of that. If it is wrong to take 10s. in the £ it is wrong to take 6d. [AN HON. MEMBER: "He said that it


would matter less."] He said that it would matter less. The Clause suggests that the maximum should be £50 a year, in which case, I suppose, my hon. Friend would suggest that it is all right to put your hand into the plate after £50 had been taken out, but not before. There, I think, my hon. Friend's argument breaks down.
There is no point in the argument as to whether this is or is not a contractual payment. My hon. Friend the Member for Walsall (Sir G. Schuster) made some play with the point, but that has nothing to do with Income Tax. When deciding whether something of this kind is income or not, it does not matter whether it is contractual or not. The barrister who draws his fees receives something which is not contractual. The waiter or hall porter who receives tips is assessed on those tips, and I find it difficult to distinguish between his case and the case of the clergyman who receives a gift from his parishioners. Then there are the other churches. In the Church of Rome there are many occasions when members of the congregation make a voluntary payment to a priest for a Mass. That voluntary payment is a taxable payment, and in fact such payments form the greater part of the remuneration of many priests. I think it would be quite unjust to relieve the Easter offerings of the Church of England—of which I am happy to be a member—and not to relieve offerings made in very similar circumstances.

Mr. Driberg: Surely those are. fees or offerings for quite specific services? They are not a general tribute to the personality of the man.

Mr. Assheton: They are paid to the priest, just as an Easter offering is paid to the clergyman by virtue of his office.

Mr. Driberg: But surely they are in the same category as funeral or marriage fees.

Mr. Assheton: But he receives them by virtue of his office.
I would like to deal with the point of poverty. It has been said by many Members, and it is well known, that the clergy are poor. I would say, in the first place, that it is a great discredit to many of the congregations that those clergy are poor. In the second place, I

suggest that clergymen of the Church of England do not want to be exempt from taxation which falls upon them if similar taxation falls upon people with similar burdens. The whole essence of our taxation is that it is so carefully adjusted that it falls upon people according to what they can afford to pay. Look at the anomalies which would result from this Clause. Suppose you have two clergymen in adjoining parishes, each with an income of £400 a year. One has £400 from investments which belong to the living, and the other has £50 from Easter offerings and £350 from investments. Each clergyman has a wife and two children, so that both are in the same position to bear whatever taxation has to be borne. Why should the clergyman who derives £50 of his income from Easter offerings be treated in any way differently from the person who derives the whole amount from investment? The proper way to meet the matter is the way in which the Church authorities are trying to meet it now. We have heard from my hon. Friend the Member for Central Leeds (Mr. Denman) the views of an Ecclesiastical Commissioner, and I am certain that the views he expressed represent the general views of the Church. The Church would not seek to have some advantage at the expense of the rest of the community. They would take such steps as are open to them.

Earl Winterton: Does the Financial Secretary suggest that my hon. Friend the Member for Central Leeds (Mr. Denman) was speaking on behalf of the Ecclesiastical Commissioners?

Mr. Assheton: I said that he spoke as an Ecclesiastical Commissioner.

Mr. Denman: An ex-Ecclesiastical Commissioner.

Earl Winterton: It is important that we should know whether he was representing the views of the Ecclesiastical Commissioners.

Mr. Assheton: I did not suggest that he had expressed the views of the Ecclesiastical Commissioners. I do not know them, but I should not be at all surprised to hear that he did.

Mr. Denman: I used to be an Ecclesiastical Commissioner until about a month


ago, but anyhow I have no authority to speak on their behalf. I was only speaking as one who had had a particularly long experience of these matters.

Mr. Assheton: I do not want to put anything into the mouths of the Ecclesiastical Commissioners, but it is clear that my hon. Friend has had great experience of these matters, just as I myself have had experience of problems of Church finance. I was saying that the proper remedy was for the Church to see that the clergymen were properly paid, and I am happy to say that the Church is at the present time taking steps in that direction, and I believe that very soon the situation will be better than it is to-day. So far as this particular Clause is concerned, I am satisfied of two things—that, if it were accepted it would not be just, and I am also satisfied that, from the point of view of the Church, it would not be wise. My hon. Friend made that point very well and I ask the Committee therefore to agree with the Chancellor of the Exchequer, who said that not only was this the law, but it was also common sense.

Mr. A. Edwards: I am not a member of the Church of England, but I have many friends among the clergy, and I do not think that they will be very pleased about the arguments which have been put up on their behalf to-day. It is said the labourer should be worthy of his hire, and the hon. Member for Central Leeds (Mr. Denman) said that he has spent a good deal of his life acting in the interests and prosperity of the clergy, and it must have borne upon him to-day that he has had a wasted life.

Mr. Denman: I only said that I had spent more time than most Members.

Mr. Edwards: Had the hon. Member been more successful and the clergy had a decent living, this question would not have arisen.1s it not suggested that, if they had been provided with decent salaries, they would not have had to do this cadging? [An HON. MEMBER: "It is not cadging."] Is it dignified that a man, once regularly in every year in order that he may approach something like decency, should have to cadge from the congregation?

Mr. Goldie: If the hon. Member will look at the Rubric of the Communion Service he will find that it is the duty of every parishioner at Easter to settle his bills with the vicar.

Mr. Edwards: It also says in the Scriptures that everything shall be done decently and in order. Then let everything in regard to salaries be done decently and in order. Let the people who worship provide the funds. Many friends of mine feel that they have to cadge anyhow, no matter what the interpretation of my hon. Friend is. I listened to the arguments of hon. Friends, and I was impressed, and I was still more impressed when I heard the Chancellor's reply, and I cannot always say that. He certainly tore the arguments to pieces here. I have watched the activities of the hon. Gentleman the Member for South Croydon (Sir H. Williams), who is supporting this proposal, for some time. His ideas are always flowing in one direction, towards what is known as the Poor Law. A good many of the clergy and certainly those whom I know will be sorry of some of the arguments which have been put up here to perpetuate their poverty by gifts which are given to them out of pity for their poverty.

Commander Sir Archibald Southby: I apologise to the Committee for speaking in the Debate, not having heard all the arguments, but circumstances beyond my control made it impossible for me to be here before now. I confess that although it may be legal, that this taxation should take place, it seems to me that what we are discussing now is the question of justice towards the vicar. It cannot be common sense, if I send a cheque to the vicar's Easter offering, that it should be taxed, whereas if I meet him in the Street and slip £5 into his hand and say, "This is my Easter offering, but call it a donation for your holiday fund," that then it should not be taxed. It is no argument at all to suggest that the stipends of vicars ought to be greater than they are. Everybody knows that they ought to be greater than they are. I agree with the hon. Member who remarked that the efforts of the hon. Member for Central Leeds (Mr. Denman) to further the prosperity of the clergy have not been successful. That is why we are now trying to do something to help the clergy. This Easter offering is


not part of the stipend. I look upon my donation, speaking personally as a member of the Church of England, as a gift that I ought to give at a certain time of the year, but I do not feel bound to give the same amount each year, nor, indeed, to give it every year.

Mr. A. Edwards: The vicar would be hard up if you did not.

Sir A. Southby: It is wrong to say that it is only given where the stipend is low. The Easter offering is given whatever the income of the vicar may be. It is also wrong to suggest that circumstances are the same with regard to members of the Roman Catholic Church. It is not so at all. In that case the sums are fees.

Mr. Assheton: They are voluntary offerings.

Sir A. Southby: They are voluntary offerings for services rendered. As I see it, the incomes are not comparable in the case which the Minister put forward when he said, that if there were two vicars in adjoining parishes, one having £400 a year and the other £350 a year, plus £50 Easter offering, it was right that both should be taxed. I do not think the cases are comparable at all. In the latter the vicar could not know with any certainty in any year that he would have that £50. Although the legal position may be what has been stated in the Committee, in common justice to men who are very hard working, these voluntary donations should be free of tax. It is true that the £50 limit is unreasonable. I would sooner have said that the whole of the vicar's Easter offering should be tax free, but it is a case of
These ought ye to have done, and not to leave the other undone.
I agree with other hon. Gentleman, however, that £50 would be a beginning. If this question goes to a Division, I shall vote for the Clause.

Major Sir Edward Cadogan: I have listened to nearly the whole of the Debate and to the judgment by some learned Judge which was read out by the Chancellor of the Exchequer. I gather from that that the gift is taxable in virtue of the recipient's office, if it is "normal and continuous." Those are the definite words. How on earth a gift can be "normal and continuous" which is

entirely art the option of the parishioners is something of which I would like to have an explanation.

Mr. Goldie: Unfortunately, I was not present to hear the speech of my hon. and learned Friend the Member for North Croydon (Mr. Willink), but I want to join issue with the Financial Secretary in his discussion of the question: Is the law just? From my experience I am convinced that the law as it exists at present is not just. Expressions of opinion have been made from all sides of the Committee that this injustice ought to be put right, and I ask the Chancellor whether, between now and next stage of the Bill, he will reconsider the matter. My objection to the present state of affairs is this: The Blakeston case in the House of Lords laid down a hard and fast rule which, of necessity, has been applied by courts of law in matters which have no concern with Easter offerings and which have inflicted untold hardships on recipients who have received gifts from those who are fond of them. I must be careful not to depart from the question of Easter offerings, but as an instance let me give an example from my own experience. A former Member of this House, practising at the Bar, left to join the Armed Forces of the Crown. Being a generous man and having in his employment a clerk nearly 80 years of age who had been with him for many years, he gave him a very substantial cheque simply as a mark of appreciation of their years of service together. What happened? Fifty per cent. of that cheque was taken by the Revenue authorities on the basis of the Blakeston case.
The Financial Secretary talked about a contract having nothing to do with it, but the first thing you look into is to see whether there is a contract. That is the distinction between the Seymour case, in which there was a benefit, and the cases of professional footballers for whom I have appeared. We have got down to the absolute narrow border line with the Income Tax authorities who stand on the Blakeston case. In the interests of our clergy dare I ask the Chancellor to show leniency." Very soon, offerings will be given at our churches at Whitsun for our curates, whose wages in most cases are extremely small. The principle underlying this law is wrong from the word "Go," and I say that we would be failing in our duty if we did not make an appeal


to the Chancellor to give further consideration to this matter.

Mr. Gallacher: I am interested in this discussion, because it seems to me that the clergymen of this country seem to have very many enemies in this House. There is a Scripture that is worth quoting at this moment:
Woe unto you, when all men shall speak well of you.
I am very much concerned about the spiritual standing of the clergy, particularly after hearing the speech of the hon. Member for South Kensington (Sir W. Davison), who suggested that when you heard a clergyman make a really good sermon you felt like putting your hand into your pocket and saying, "There you are, my lad." What would the hon. Member consider to be a good sermon? Think of the temptation which will be put in the way of the clergy. I am not concerned about a sermon for soothing the troubled breast of the hon. Member for South Kensington but about those who go into the slum areas of this country and spend their lives helping mothers, the sick and helpless. Nobody ever thinks of making offerings to them, particularly if they go into the pulpit or on to a public platform and say what they think about the rotten system that produces their conditions.

The Deputy-Chairman: I think the hon. Member is getting rather wide of the point at issue.

Mr. Gallacher: Do not be concerned about offerings to the clergy. Do not give them any; they will be all the better for getting no offerings; they will be all the better for doing a little bit of "scrounging" or fighting to get better conditions. Remember the Beatitudes.
Blessed are the poor.
Nothing is ever said about blessing those who will receive the offerings of wealthy patrons. Then there is the other:
Blessed are ye when men shall revile you … for My sake.
If Members on the other side would start abusing and reviling our clergy we should feel that the clergy were doing something worth while.

Mr. Willink: There seemed a little doubt on the Front Bench when I interrupted the Financial Secretary, and I

would like to make my point clear. The authorities as I know them do not indicate that there is opposition in high legal quarters to a change in the law. The opposition comes from the Treasury, not from the Judges. May I make a short quotation from a judgment given by Mr. Justice Rowlatt in deciding a case about Whitsuntide offerings? In the case of the Rev. Starkie, in 1931, in the King's Bench Division, he said:
In my judgment it is quite clear that iu this case the Crown are entitled to succeed. Although it is very unpleasant to have to decide against the respondent, one has to apply the law to the best of one's ability.
There is an indication that in the view of the learned Judge the law needed to be changed. The learned Judge finished his judgment in these words:
In these circumstances, although I very much dislike deciding these cases against people like Mr. Starkie, I have 'no alternative but to say that I think the Crown are right and that this appeal must be allowed.
I regretted very much to hear the hon. Member for Chesterfield (Mr. Benson) saying it was more a question of, "Was this income? "There are all sorts of income which are not taxable. The question before the Committee is whether the whole of this money should be taxable.

Mr. Benson: The hon. and learned Member suggests that the law is unjust and should be altered. May I point out that the effect of the Clause which we are discussing now is not to alter the law? Whitsuntide offerings will be untouched. It merely says we are to make an exception in one portion of the law, and that is the first £50 of Easter offerings. If the law is indefensible, there is only one thing for the House to do and that is to alter it, and not make a tiny exception.

Mr. Willink: I have never known any Amendment to any Bill which made all necessary amendments to the law.

Mr. Ivor Thomas: It is with great reluctance that I do so, but there is no question of confidence in the Government involved, and, in view of the inability of the Chancellor to give any reconsideration between now and Report, I must force this to a Division.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 65; Noes, 111.

Division No. 21.
AYES.



Acland-Troyte, Lt.-Col. G. J.
Hill, Prof. A. V.
Savory, Professor D. L.


Adams, D. (Consett)
Hinchingbrooke, Viscount
Schuster, Sir G. E.


Boles, Lt.-Col. D. C.
Hogg, Hon. Q. McG.
Shakespeare, Sir G. H.


Braithwaite, Major A. N. (Buckrose)
Jennings, R.
Smith, E. P. (Ashford)


Brooke, H. (Lewisham)
Joynson-Hicks, Lt.-Comdr. Hn. L. W.
Smithers, Sir W.


Butcher, Lieut. H. W.
Keir, Mrs. Cazalet
Southby, Comdr. Sir A. R. J.


Cadogan, Major Sir E.
King-Hall, Commander W. S. R.
Stuart, Lord C. Crichton- (Northwich)


Cluse, W. S.
Lamb, Sir J. Q.
Taylor, Major C. S. (Eastbourne)


Cobb, Captain E. C.
Lambert, Rt. Hon. G.
Thomas, Dr. W. S. Russell (S'th'm'tn)


Cook, Lt.-Col. Sir T. R. A. M.(N'flk, N.)
Linstead, H. N.
Touche, G. C.


Crowder, Capt. J. F. E.
Little, Dr. J. (Down)
Tree, A. R. L. F.


De Chair, Capt. S. S.
Lucas, Major Sir J. M.
Tufnell, Lieut.-Comdr. R. L.


Driberg, T. E. N.
Mills, Colonel J. D. (New Forest)
Wedderburn, H. J. S.


Elliston, Captain G. S.
Morgan, R. H. (Stourbridge)
White, Sir Dymoke (Fareham)


Emmott, C. E. G. C.
Nunn, W.
Williams, Sir H. G. (Croydon, S.)


Fremantle, Sir F. E.
Ponsonby, Col. C. E.
Willink, H. U.


Galbraith, Comdr. T. D.
Rankin, Sir R.
Windsor-Clive, Lt.-Col. G.


Graham, Capt. A. C.
Rathbone, Eleanor
Winterton, Rt. Hon. Earl


Gridley, Sir A. B.
Reed, Sir H. S. (Aylesbury)
York, Major C.


Hall, W. G. (Colne Valley)
Rickards, G. W.



Hannah, I. C.
Robertson, Rt. Hon. Sir M. A. (Mitcham)
TELLERS FOR THE AYES.—


Harvey, T. E.
Royds, Admiral Sir P. M. R.
Mr. Ivor Thomas and Mr.


Higgs, W. F.
Sanderson, Sir F. B.
Boothby.




NOES.


Adamson, Jennie L. (Dartford)
Foot, D. M.
Pilkington, Captain R. A.


Adamson, W. M. (Cannock)
Gallacher, W.
Power, Sir J. C.


Albery, Sir Irving
Gibson, Sir C. G.
Pownall, Lt.-Col. Sir Assheton


Assheton, R.
Goldie, N. B.
Ritson, J.


Barnes, A. J.
Green, W. H. (Deptford)
Robertson, D. (Streatham)


Beaumont, Maj. Hn. R. E. B. (P'hsm'h)
Greenwood, Rt. Hon. A.
Salt, E. W.


Beit, Sir A. L.
Grimston, R. V.
Scott, Donald (Wansbeck)


Bennett, Sir P. F. B. (Edgbaston)
Guy, W. H.
Silkin, L.


Benson, G.
Hardie, Agnes
Smith, Bracewell (Dulwich)


Bevan, A.
Henderson, J. J. Craik (Leeds, N.E.)
Somervell, Rt. Hon. Sir D. B.


Blair, Sir R.
Hughes, R. Moelwyn
Spearman, A C. M.


Boulton, W. W.
Hulbert, Wing-Commander N. J.
Stephen, C.


Bower, Comdr. R. T. (Cleveland)
James, Wing-Com. A. (Well'borough)
Storey, S.


Brocklebank, Sir C. E. R.
Jowitt, Rt. Hon. Sir W. A.
Strauss, G. R. (Lambeth, N.)


Brooks, T. J. (Bothwell)
Kimball, Major L.
Stuart, Rt. Hon. J. (Moray &amp; Nairn)


Burton, Col. H. W.
Kirby, B. V.
Sueter, Rear-Admiral Sir M. F.


Campbell, Sir E. T. (Bromley)
Knox, Major-General Sir A. W. F.
Sutcliffe, H.


Cary, R. A.
Leonard, W.
Taylor, H. B. (Mansfield)


Charleton, H. C.
Leslie, J. R.
Thomas, J. P. L. (Hereford)


Chorlton, A. E. L.
Lipson, D. L.
Thorne, W.


Clynes, Rt. Hon. J. R.
Manningham-Buller, R. E.
Thorneycroft, Maj. G. E. P. (Stafford)


Colegate, W. A.
McEntee, V. la T.
Viant, S. P.


Cooke, J. D. (Hammersmith, S.)
McEwen, Capt. J. H. F.
Walkden, A. G. (Bristol, S.)


Cove, W. G.
Mack, J. D.
Walker, J.


Craven-Ellis, W.
McKie, J. H.
Ward, Col. Sir A. L. (Hull)


Critchley, A.
McNeil, H.
Wardlaw-Milne, Sir J. S.


Davies, Major Sir G. F. (Yeovil)
Makins, Brig.-Gen. Sir E.
Watkins, F. C.


Denman, Hen. R. D.
Mellor, Sir J. S. P.
Webbe, Sir W. Harold


Douglas, F. C. R.
Mills, Sir F. (Leyton, E.)
Westwood, J.


Drewe, C.
Molson, A. H. E.
White, H. (Derby, N.E.)


Dugdale, Major T. L. (Richmond)
Montague, F.
Whiteley, Rt. Hon. W. (Blaydon)


Dunn, E.
Murray, J. D. (Spennymoor)
Williams, Rt. Hon. T. (Don Valley)


Edmondson, Major Sir J.
Nicholson, Capt. C. (Farnham)
Womersley, Rt. Hon. Sir W.


Edwards, A. (Middlesbrough, E.)
O'Neill, Rt. Hon. Sir H.
Wood, Rt. Hon. Sir K. (Woolwich, W.)


Edwards, Walter J. (Whitechapel)
Peat, C. U.
Woodburn, A.


Erskine-Hill, A. G.
Petherick, Major M.



Etherton, Ralph
Pethick-Lawrence, Rt. Hon. F. W.
TELLERS FOR THE NOES.—


Findlay, Sir E.
Peto, Major B. A. J.
Mr. Pym and Mr. A. S. Young.

The Deputy-,Chairman (Mr. Charles Williams): Mr. Craven-Ellis.

Sir. H. Williams: May I ask leave to move to report Progess?

The Deputy-Chairman: No.

NEW CLAUSER.—(Provision as to deduction in computing excess profits.)

(1) In Subsection (2) of Section thirty-three Of the Finance Act, 1940 (which deals with

the computation of profits for excess profits-tax), the following proviso shall be inserted after the words "as the Commissioners think proper,"—
Provided that, no such deduction shall be treated in such a manner as to increase the amount of the liability to the excess profits tax above the amount which would have been payable if the expenditure represented by the deduction had not been incurred.

2) The amendment effected by this section shall have effect with respect to tax for all


chargeable accounting periods, whether before or after the passing of this Act.—[Mr. Craven-Ellis.]

Brought up, and read the First, time.

Mr. Craven-Ellis: I beg to move, "That the Clause be read a Second time."
The object of this new Clause is to endeavour to get rid of what many Members consider to be a great injustice under the Excess Profits Tax. I would refer the Chancellor to Subsection (2) of Section 33 of the 1940 Finance Act, in which the Commissioner has the opportunity of accepting or not accepting definite expenditure, say for repairs, and of deciding that the expenditure shall be spread over a period. He has, to a large extent, to investigate when similar repairs were required previous to the expenditure in question. It may be decided, that the period is to years and the Commissioner will say that the expenditure shall be spread over 10 years. I will quote one or two figures. I do not intend to burden the Committee with the whole of a complicated statement which I have prepared to support my Clause, so I will hand it to the Chancellor when I have finished. Suppose there is an expenditure of £10,000 in 1941. That is spread over Io years, which means that in that year only one-tenth is brought into account. The balance is carried back to previous accounts. These accounts can be re-opened, and I should like to ask the Chancellor whether the Statute of Limitations does not come into question? If the 10 years is the period of spread, what will be the position for those years which do not come within the six years in which it is allowed to re-open the accounts? I should like the Chancellor to give the Treasury view on that point.
The £10,000 having been treated in this way, it means that in 1941 the profits would be increased by nine-tenths. Then the one-tenth will be accounted for in the accounting period in question, that is 1941. This means that the total payment of E.P.T. is £10,000. It is true that Income Tax is lost by the Exchequer to the extent of £5,000. What is the position in subsequent years? This is a point I want to stress, because it seems to me that there is some injustice in the operation of this Section. It means first that the profits are increased by the reduction of standard profit by £10,000 a year. Then

there is the question of capital adjustment. I am taking the period from 1941 when the expenditure was incurred to 1947 to give an example of the effect of the cost in terms of E.P.T. The result of this decision by the Commissioner is rather interesting but somewhat alarming. It means that in seven years the E.P.T. payable is more than twice the amount of the cost of the repairs. It is made up in this way. The cost of the full allowance in 1941 is £10,000, the cost of the decrease in Standard profit for 1942–47 £10,000, and the cost of the consequential capital readjustment £4,132. From 1941 to 1947 the total cost which is incurred for this £10,000 expenditure is £20,132 and it will continue accumulating as long as E.P.T. is on the Statute Book.
I am the last to say that there should be any profit in war, but I must draw the attention of the Committee to the possibility of these anomalies. They are not intentional and it is how things work out, but when anomalies arise we must try to correct them. If these anomalies are not adjusted, I fear that we shall shake the whole foundation of industry. If we do that we shall be in a difficult position in regard to getting full employment when the war is over. We must have regard to what the post-war position may be, however sincere and determined we are that the first consideration must be the wining of the war. Charging expenditure on repairs in this way is no encouragement for the owners of industrial property to keep them in proper repair. We do not want to have a policy of taxation which will lead to a lower standard in that respect.

The Attorney-General: As my hon. Friend recognises, these points are a little difficult to follow in Debate. My right hon. Friend will certainly look at the Case which my, hon. Friend has put forward and the table of figures which he has prepared with regard to it. We cannot accept the principle in the new Clause and I feel sure that my hon. Friend will not press it. The principle is that
no deduction shall be treated in such a manner as to increase the amount of the liability to the Excess Profits Tax above the amount which would have been payable if the expenditure represented by the deduction had not been incurred.
If you are dealing solely with expenditure in the chargeable period no doubt that is


a principle on which one can work to see how far there can be any departures from it. But if you consider an expenditure covering more than one year of the standard period which obviously has to beg, spread back, then necessarily the taxpayer's liability would be greater. I understand from what my hon. Friend said that the case he has in mind is one in which the expenditure was made in the chargeable period and was then spread backwards. I do not think the Statute of Limitations comes into it, because that really deals with the question of how far you can recover money or tax by legal process. The point of this Section is to enable sums payable in one year to be spread over other years in order to arrive at the proper figure. I hope that my hon. Friend will be content with the assurance of my right hon. Friend that he will look into this case.

Mr. Craven-Ellis: On that assurance and that explanation I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Additional allowance in computation of standard profits.)

(1) In the proviso to Sub-section (2) of Section thirteen of the Finance (No. 2) Act, 1939 (which deals with the computation of standard profits), insert at the end,—
and in the case of any other trade or business the Commissioners may, if they are so satisfied and think fit, direct that there shall be allowed, in addition to the minimum amount, such further sum not exceeding one thousand pounds as may be specified in the direction.
(2) The amendment effected by this Section shall have effect with respect to tax for all chargeable accounting periods, whether before or after the passing of this Act.—[Mr. Craven-Ellis.]

Brought up, and read the First time.

Mr. Craven-Ellis: I beg to move, "That the Clause be read a Second time."
This new Clause relates to what is known as the minimum standard. If you are in business or trade as an individual, your minimum standard will be £1,000, but if you are in a partnership or are one of three working partners, your minimum standard will be £4,500. The object of this new Clause is to put the person who is the head of a trade or business into the more favourable position of those in a

partnership or company. I will quote an example which I hope will convince the Committee that there is some justification for this Clause. Let us look into the case where the minimum standard for the individual who is in trade or business is £1,000 and the minimum standard for the partnership or for a company with three working partners is £4,500. Contrasting those cases we see the varying effects of the minimum standard. Let us assume that the current year's profits were £5,000. The individual who is running the trade or business would have to pay E.P.T. on the differences of the £1,000 minimum standard and £5,000 current profits, and therefore he is burdened with a tax of £4,000. In the case of the partnership with three working partners or the company with three working partners, the difference between their minimum standard of £4,500 and the current years profit of £5,000 means that E.P.T. is payable only upon £500. That difference does deserve some consideration in order that the individual can be put on a par with a partnership or a company.

Sir K. Wood: My hon. Friend has put forward a case for my consideration and I would offer just one or two observations concerning it. I think he has omitted a matter which has a very material bearing on the question, namely, why Parliament came to the decision it did on this question. Generally speaking, apart from the merits of the Clause, I feel that unless a very strong case is made out, it would be wrong for me, at this stage, in the life of the Excess Profits Tax to begin to make considerable variations in its general provision, which were decided by Parliament after considerable Debate. It must not be said that I would not endeavour to deal with any difficulties which may arise, but the tax has been in operation for some time, and we may now look forward not so much to its continuation as, perhaps, to the day when it will disappear altogether. I think the Committee will appreciate the view I must take of proposals for substantial alteration at the present time.
But let me point out that there is, of course, a material reason for the variation between the two, classes of cases. The Section of the Finance Act to which the hon. Member referred me is Section 13 of the Finance (No. 2) Act, 1939, as amended by a section of the Finance Act,


1940. It provides for a general minimum standard of £1,000, but enacts that in the case of the trade or business carried on by a single individual, a partnership or a director-controlled company, the normal minimum standard shall be £1,500 for each working proprietor in the business, subject to a maximum of £6,000. It is true that there is a provision which gives the Commissioners of Inland Revenue a discretion in respect of not more than £1,000 for each working proprietor, or £4,000 in all, where they are satisfied, having regard to the nature and size of the business, that the normal standard is inadequate.
My hon. Friend is now suggesting that because a discretion is given in that class of case there ought to be a similar discretion in the case of other businesses with which this Clause is concerned, namely, those companies which are not director-controlled. There is, however, a very clear distinction between the two types of case. In computing for Excess Profits Tax purposes, the profits of a business carried on by a single individual, a partnership or a director-controlled company, no deduction is allowed in respect of the remuneration or drawings of the individual proprietors, partners or proprietor-directors, but when you come to the question of trades or businesses in which all remuneration paid even to the directors and proprietors is allowed as a deduction when computing profits, so long as they are not unreasonable, there you have a very clear indication of why Parliament made the distinction and gave the discretion to the Commissioners in one case but not in the other. Whilst I will examine the case further in the light of what my hon. Friend has said, to see whether, on reflection, further consideration ought to be given to this matter, in view of the very clear distinction between the one case and the other I doubt very much if I shall feel able to go further.

Mr. Craven-Ellis: There was part of the Chancellor's remarks which rather disturbed me. He said: "We have gone so far," the implication being "Why bother? We have gone so far and let us do the rest of the journey in the same saddle." That may be all right, and one would not complain if the case which I put forward did not expose the vast dis-

tinction there is between one class of profit and another. However, I am pleased to have had the Chancellor's statement, and I think it was useful, and I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Repeal of armorial bearings duty.)

(1) The duties of excise chargeable under the Revenue Act, 1869, in respect of armorial bearings shall cease to be chargeable, and no licence stall be required to be taken out under that Act in respect of the wearing or use of armorial bearings.

(2) This section shall come into operation on the first day of January, nineteen hundred and forty-four.Ȕ[Mr. Brooke.]

Brought up, and read the First time.

Mr. Brooke: I beg to move, "That the Clause be read a Second time."
The Armorial Bearings Duty is an obsolete tax which cannot be enforced, brings in only a tiny revenue, and ought to be abolished. The Committee will see from the proposed new Clause that it has continued untouched since 1869, so at least the Chancellor will agree that it is time we took it out of the cupboard and had a look at it. The Act of 1869 imposed a duty of two guineas a year on anybody who used armorial bearings on his carriage, and one guinea a year on anyone who uses armorial bearings or any kind of crest, device or ensign otherwise than on a carriage. Let me make it clear that this duty and my speech have nothing whatever to do with the grant of the right to armorial bearings. You have to pay the duty whether the bearings relate to your family or not; if you have a crest of any kind on a seal or signet-ring, a piece of silver plate or china, whether it is your own or not, you are liable for a guinea. I hope I do not see any hon. Members looking guilty. I must warn them that the penalty for non-payment is £20.
The Act of 1869, which I have here, imposed a variety of duties by Section 18 on male servants, carriages, horses, mules, armorial bearings, and horse dealers. Over the years we have got rid of all those obsolete duties, even that upon horse dealers. The duty on male servants went six years ago, and now we are left with only the duty on armorial bearings. In the years from 1870 to the outbreak of the


last war, the duty used to bring in £70,000 or £80,000 a year, quite a tidy sum in relation to the Budgets of those days. Since then the yield has been growing smaller. For one thing, carriages are less used and therefore the two-guinea duty hardly brings in anything now, although it is chargable on armorial bearings on motor cars. The £80,000 fell to some £50,000 after the end of the last war, and the yield continued to diminish until, immediately before this war, it was only £33,000. For the last year for which figures are available, the year 1941–42, it was down to a meagre £23,000. That is the sum of money which the Committee are discussing.
It is clear that there is evasion on a wide scale; yet my own belief is that evasion is not the main cause of this diminution in the last 20 years, but sheer ignorance that such a tax is payable. Elderly people who have paid it all their lives realise the fact and are pricked by their consciences when they have not paid their guinea, but the majority of younger people have never heard that there is such a tax. There is a difficulty in the way of the Chancellor doing the obvious thing and sweeping the tax out of existence immediately in that this House decided in 1909 that tine Armorial Bearings Duty in England and Wales should in future be collected and retained by the local authorities—county councils and county boroughs—though it continues to be collected and retained by the State in Scotland. When previous Chancellors have been questioned about this matter they have been inclined to use the argument that the tax is now out of their control and that enforcement is up to the local authority. They have suggested that if there is unfairness or inequity it is the fault of the local authority. The matter may be out of the control of the Chancellor of the Exchequer, but it is certainly not out of the control of Parliament. We have imposed the duty, and it is our task to make certain that it operates fairly between one taxpayer and another. Either it is enforced on all, or if it is proved unenforceable it should be repealed. If it is argued that the local authorities should be more active in enforcing it, because the revenue accrues to them, let us see in practice what that would mean. It would mean that the——

Sir K. Wood: May I interrupt my hon. Friend to say that I shall not use any of those arguments to-day? Perhaps I shall

be able to make a statement which will be satisfactory to my hon. Friend, so that we can get on with the Bill.

Mr. Brooke: I am very pleased to hear what the Chancellor has just said. In 1798, just before Nelson won the victory of the Nile, Parliament first imposed an Armorial Bearings Duty. It has lasted for 145 years. I hope that this moment, when we have just again cleared the Mediterranean of the enemy, may be another landmark in its history.

Sir K. Wood: I have a great deal of sympathy with what my hon. Friend has said. It looks to me as though this tax has exhausted itself. It is a matter with which the local authorities are concerned, as he has said, and also the authorities in Scotland. Following the proposal which my hon. Friend has made, I will undertake to consult the local authorities and the people concerned, with a view to making a proposal in connection with this matter next year. Obviously, I cannot do it without consultation with them, but it does not seem to me that there is very much in this duty from my point of view. It may be rather an unnecessary and vexatious burden that is not worth collecting.

Sir H. Williams: This is an occasion when the right hon. Gentleman need not worry about anticipating his Budget statement. Does he think he will be able to make some statement within some reasonable time before his next Budget? This is a very strange tax. It is really a tax upon illiteracy. I believe that armorial bearings were invented to certify documents of people who could not write.

Mr. Assheton: No. For going into battle.

Sir H. Williams: These people had clerks in holy orders who could do the writing. Of course, these bearings were also a farm of snobbery. The Committee should be very grateful to the hon. Member for West Lewisham (Mr. Brooke) for bringing this matter before us and also to the Chancellor for the generous attitude he has adopted. Naturally, any statement made by the right hon. Gentleman would bind not only him but his successor, unless some very revolutionary change takes place in the composition of the Government. It would be helpful if he could let us know some reasonable time


before the next Budget the result of his consultation with the local authorities. Some of us are interested in these financial matters, and it is just as well to discuss them with some care and consideration.

Sir K. Wood: Yes, I will do that.

Mr. Goldie: As one who has paid the Armorial Bearings Duty I should like to make what I hope will be regarded as a helpful suggestion. I have in my possession a gold watch which I got from my father. At the back are some scratchings and when I asked my father what they were he told me that his father, my grandfather, had the family crest taken off the watch in 1869, because he flatly declined to pay the duty. My one regret is that the old gentleman did not go the whole hog because I have also in my possession a considerable amount of family silver which, to my great discontent, has the crest on it. It is not pleasant for people to have to pay tax for something of which they thoroughly disapprove. If anybody is sufficiently a vulgarian to want an armorial bearing or a crest on his motor car, I say let him pay for it up to the hilt. Let the Chancellor take off the tax on old family silver and rings, and increase it as much as he likes on coats of arms on motor cars. It seems to me that that would get us out of the difficulty and certainly would not place an increased burden on the revenue.

Mr. Benson: I do not wish to take up much time on this matter, but I do wish to thank the Chancellor. I suggest that war time, when he is budgeting for a deficit of £2,000,000,000 or £3,000,000,000 a year, is the time when he might go with a duster through our financial machinery and sweep away a large number of these little trivial taxes which have accumulated over centuries, which bring in little or no revenue but which make our machinery complicated. I hope that between now and next year, he will see which of these taxes he can get rid of.

Mr. Brooke: I am very grateful to the Chancellor. I hope he will find it possible to make an announcement before 1st January next, when the tax will otherwise become payable for 1944. I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Deduction in respect of certain subscriptions.)

Rules 9 and 10 relating to Schedule E of the Income Tax Act, 1918, shall be construed as providing that any amount (not exceeding £15 in the aggregate in any year) paid by any person by way of subscription to any institution or other body which is, in the opinion of the Treasury, conducted wholly or mainly for the advancement of any branch of learning, science or technology and not operating for profit, may be deducted from the salary, fees or emoluments to be assessed in respect of such person.—[Mr. Linstead.]

Brought up, and read the First time.

Mr. Linstead: I beg to move, "That the Clause be read a Second time."
The object of this Clause is to repair an anomaly in the present law which bears rather hardly on certain of those who practise various branches of learning, science or technology. I can best illustrate the anomaly by referring very briefly to a distinction which the present law makes between scientific men who are practising their profession independently and scientific men who are practising their profession as employees. In the first case, the man who is carrying on some branch of science as a profession is, of count, assessed under Schedule D as a person who is carrying on a profession, whereas the employee is assessed under Schedule E as holding an office or employment. The independent professional man is entitled to deduct for Income Tax purposes any annual subscription to a scientific body which gives the right to use a qualification. No such concession is allowed to the scientific man who is employed, unless it is a condition of his employment that he should belong to that particular scientific society.
The anomaly, I think, can best be illustrated if one takes the case of a public analyst. Supposing there was an analytical chemist practising on his own account, who was also a part-time analyst to a city or county or borough. He would be entitled to deduct his subscription, for example, to the Institute of Chemistry or the Chemical Society because that is a subscription to a society giving the right to use a qualification. But if the same man were a borough analyst full-time and, consequently, an employee he would not be entitled to deduct subscriptions to those scientific bodies unless he had been able to persuade his employing local authority to make membership


of those bodies a condition of his employment. This encourages attempts to escape the provisions of the law by employees who try to persuade the local authority, or whoever employs them, to impose membership of scientific societies as a condition of their employment. That is extremely clumsy and extremely inequitable because many employers naturally hesitate to assist in what they believe is an evasion of the law.
One recognises that the Treasury's duty is to safeguard the revenue, and I can well imagine that the Chancellor may say to us, "If I begin to make this concession in the case of a certain group of people—those who are practising science—I shall have a very large number of applications from other groups in the community for similar concessions." He may also say that it is difficult for the Treasury to decide which subscriptions to which societies should be entitled to this exemption. I think the answer to both those objections would be that there is in existence to-day for the use of Income Tax inspectors a list of societies, the subscriptions to which are allowed when the professional man is working on his own account, and that list of societies would be available if the same concession were to be extended to the man working as an employee.
One does not want, in dealing with financial matters, to appeal ad misericordiam. It is the duty of the Chancellor to harden his heart but nevertheless—[Interruption.]—we will see if we can bring about a chemical transformation of the Chancellor's heart and get it a little softer. The point I wish to make is that, generally speaking, the employees, the people who would benefit from this concession, are the more lowly paid scientific personnel. It is extremely difficult for a young graduate of a university who may be receiving £5, £6 or £7 a week to join the various scientific societies he would like to join, and which he ought to be encouraged to join, when the subscriptions may total £8 or £9 a year. The older man working on his own account will be able to afford them but the young man, who is full of enthusiasm and is mostly likely to benefit from the research work of scientific institutions, finds it most difficult to pay the subscriptions.
This is really part of a larger question. This war has been described as a

scientists' war, and when it is over we are going to have a scientists' peace. In other words, there will be a colossal amount of work for scientific personnel to undertake. We have had the example of pre-war Germany, which was able to integrate all its scientific elements—universities, technical schools and industry. After this war we want to see a similar thing happen here, with every encouragement given to scientific people to join the appropriate professional scientific bodies. I am sure that any concession the Chancellor might be prepared to make would be amply repaid in the dividends, which would be forthcoming for the nation as a result of the encouragement it would give to science and scientific people.

Mr. Edmund Harvey: The plea that has been made by my hon. Friend ought, I think, to commend itself to the Committee. I do not know whether he can accomplish the miracle he set out to do, because the softening of the heart of a Chancellor of the Exchequer on the occasion of a Finance Bill is as rare an event as the liquefaction of the blood of St. Januarius. [Interruption.] Well, perhaps it occurs occasionally. This is a small concession to ask for from the point of view of the nation, but a large concession from the point of view of a great number of public servants—as I think they are, in the widest sense of the term—who are giving their services for very small salaries, in research in connection with industry, in other forms of research, and in the technical branches of all the most important industries in the country. It is in the national interest that they should keep abreast of the times, and that they should be able to interchange their experiences and knowledge with their colleagues In other firms, universities, and institutes. Unless they are able to be members of these scientific societies, that is extremely difficult. We all know that the Chancellor of the Exchequer wishes to encourage the advancement of science and its application to industry, and this is one way in which he could give encouragement of that kind, at very little cost to the State.
As the law stands, it is possible for a professional scientific worker, working on his own account, to certify in his returns certain subscriptions to scientific societies


as being essential to his work, and to get an allowance for them; but if he is working for a firm, he depends on that firm being willing to make such a certification. The managing director may take a narrow view, and may not realise the great importance of the man continuing as a member of the scientific or professional society in which he wishes to continue membership; and so he may not certify. Then there may be natural reluctance to ask the heads of a firm for a certificate of this kind. It is not fair that there should be such a disparity between a scientific worker who is working on his own account and another who is in the employment of a large firm or of some university. Again, it is important that those who are working as members of university staffs or in research laboratories not connected with industry should be encouraged and helped to continue in membership of societies which they have already joined, or of which it is necessary for them to be members. It is deplorable that so many of our scientific men, especially those engaged in research, should be so badly paid. Their salaries are in most cases far lower, than would be the case if they were employed in corresponding work in the United States. They have to meet these charges from a very modest income. In this country we do far less than is done in the United States to encourage technical and scientific research. Here is a practical way of giving such encouragement. I earnestly hope that the Chancellor of the Exchequer will be willing to accept the principle of the Clause.

The Attorney-General: I would like to congratulate my hon. Friend the Member for Putney (Mr. Linstead) upon the way in which he presented his case for this Clause, although I am afraid he may not have effected what he hoped. It is true that this raises a problem, but it is part of a wider problem. As my hon. Friend pointed out, there is, from a certain point of view, a difference between the criterion applying to a professional man who is working on his own, and who may make nothing, and that applying to the professional man who is employed, and who gets a fixed salary. The man who is employed and gets a fixed salary, if he wishes to deduct such a payment, whether it is a subscrip-

tion to a society or anything else, has to show that that expenditure is necessary for the purposes of his employment. That is a narrower test than that which applies when he is working on his own, and has to show that it is necessary for the purposes of his activities. I do not want to be technical—nobody ever does—in tying people down to the words on the Order Paper, but the Clause is quite unrestrictive. It might enable me, for instance, to deduct a subscription to an archaeological society. It does not relate the society to the employment in any way. I do not think that that is due to inadvertence, but to the difficulty of doing so. This point has been considered from time to time: it has Come before the Courts and it is realised that it raises a great difficulty as to where you are to draw the line. That is the point. One of the learned judges who decided a case on this question—obviously rather a hard case—relating to a medical officer of health who subscribed to some society, said:
I think that all subscriptions to professional societies and all taking in of professional literature and all that sort of expense which enables a man to keep himself fit for what be is doing are things which can none of them be allowed. If they were allowed every professional man would say, I have to belong to this society and I have to belong to that society; I have to take in this publication and I have to take in that publication and to do all sorts of things, and there would be no end to it.
I think that if there were cases where you could draw a satisfactory line, we would be glad to do it, but you cannot. The subscription to a learned society is only one example of the type of expenditure which a scientific man who is in salaried employment will experience. There is the buying of text books for keeping himself up-to-date. In some walks of life it can get further away. There is the schoolmasters' travelling; he may do it, in part at any rate, to keep himself fit for the work he has to do. Take the case of a don at a university. It is obviously desirable that he should spend part of his emoluments in entertaining, in having to tea and so on, some of the students under his care. Obviously that is not the kind of thing he could deduct for Income Tax purposes. I appreciate what the hon. Member for the Combined English Universities (Mr. Harvey) has said, and that it is not always easy for the man to go to his employers. The proper solution is,


of course, that those who employ professional men, scientists, schoolmasters, and so on should pay them a salary which enables them to keep themselves fit for their employment, by subscriptions to learned societies, by buying books, by travelling, by entertaining the parents of their scholars, and so on. If the expense is necessary and cannot be deducted, and if it is an undue burden, the proper thing is for representations to be made by those who are interested, or by the organisations dealing with that side of the lives of the people concerned, to see that they get salaries which enable them to keep themselves fit for their employment.

Viscount Hinchingbrooke: I am not entirely convinced by the answer of the learned Attorney-General. I understood that there is a list, prepared by the Income Tax authorities, used for the purposes of Schedule D, and, if so, why is it not possible to use the same list for this purpose under Schedule E? We are asking that exactly the same conditions should apply to those who are under Schedule E.

The Attorney-General: It really is different. A Schedule D man may get nothing at all. A Schedule E man gets a fixed salary, and a Schedule D man may get nothing unless he makes a profit, which is to some extent a check on expenditure on this account whether made in respect of learned societies or on other purposes. That is the reason why under the Income Tax law the man who gets a fixed salary has to show that it is necessary, and for the man who is on his own and may make nothing in a particular year it is sufficient to say that it is for the purpose. Once you extend the principles to the man with a fixed salary—and the quotation of the learned judge supports it from that angle—it is extremely difficult to draw the line.

Sir H. Williams: Will my right hon. and learned Friend give me some free advice on a matter in which I am personally interested? On Monday I was present at a board meeting of an engineering company when we discussed the question of whether we should encourage the technical members of the staff to join scientific and learned institutions in order to keep themselves up-to-date. Such a process would be to the advantage of the company in the long run, and we were speculating as to what our position would be as a company if we paid the subscriptions

of employees to scientific institutions and whether that would be a taxable expense. It is not the narrow interest with which I am dealing but the larger interest. It is a good thing to encourage people to get into touch with the various technical societies, and the more people belong to them the better. It does not merely give them status by having letters after their name, but it gives them access to literature and the opportunity to attend important discussions. It is vitally important to enable those engaged in scientific occupations to keep abreast of the times, and would my right hon. and learned Friend oblige me by saying what is the position of the employer who decides to pay his employees' contributions to such a society? Can the employer treat it as a working expense of the business?

The Attorney-General: If that question had been asked at Question time, I would have said that I would like to see it on the Paper, but if my hon. Friend will write to my right hon. Friend, I have no doubt that he will assist him if he can.

Mr. Barnes: Perhaps when the right hon. and learned Gentleman is examining this correspondence he will also examine whether contributions of members to trade unions can be so treated.

Mr. Linstead: I still maintain the opinion that we have here an anomaly which ought to be removed, and with every respect to the learned Attorney-General I find very little justification for the Treasury not taking some action in what he has told us. He has indicated all the difficulties which might arise if you apply to Schedule E the conditions that at present apply to Schedule D, but he did not explain to us how it was these difficulties have not arisen in so far as at present the Schedule D men get the benefit of this exemption. I did not find, to my regret, that he was very convincing, but he conjured up imaginary difficulties, when, in present circumstances, such difficulties cannot arise. We shall have to plug away at this. I am certain that it is something which ought to be put right, but obviously at the moment there is nothing to be gained by taking the matter further, and I therefore beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Moneys not required.)

There shall be added to paragraph 3 of Part II of the Seventh Schedule to the Finance (No. 2) Act, 1939, a new sub-paragraph:
In ascertaining the amount of any moneys not required for the purposes of the trade or business in any chargeable accounting period regard shall be paid not only to the current requirements but also to such other requirements as may be necessary or advisable for the maintenance and development of the trade or business."—(Sir P. Bennett.)

Brought up, and read the First time.

Sir Peter Bennett: I beg to move, "That the Clause be read a Second time."
The question is one of the capital which remains idle during certain periods in the life of a business. It will be within the knowledge of hon. Members haw this becomes important under present conditions. The amount of capital which is left in a business is part of the computation in arriving at the standard. Under normal conditions cash goes in and out of a business, but during the present conditions many of the tendencies are very much exaggerated. In every case new sets of conditions are set up. My hon. Friend the Member for Exeter (Mr. A. C. Reed) who would have moved the Clause had he been able to be present, would have told us the story of the paper pulp trade. There is an industry which must carry very considerable stocks. This is due to the fact that they have to get their stocks at a certain time of the year before the Baltic closes and hold them for the whole of the winter. What has happened in the present conditions is that control has come in and all their stocks have been taken over and paid for. They are allowed a certain amount of their own stock which they hold as storekeepers. Incidentally, they have to pay a considerable amount more for them after they have sold them to the Control, but that is not a matter for any grievance, because it comes under war conditions, and everybody understands it.
The problem is that they have on hand a considerable amount of money. If that is treated as money which is not needed in the business, it will be disallowed, but they maintain, and must maintain, that that money is in the business because at a later date they will have to restock, probably suddenly. They cannot take the money out and return it to share-

holders or invest it in other directions, because they may want it again very quickly. Therefore, they are holding it, but if the Revenue authorities say that this capital is no longer wanted in the business and they insist on its being deducted from the standard, it reduces the amount they are allowed to retain. Many of these industries are passing through a difficult period, and any amount that is deducted will be a serious matter for them. Other industries concerned are those dealing with oils and fats, which are in the same state. They have had to seal down their activities, and in consequence they have collected money and are very anxious that that money shall not be deducted in computing and working out the amount of their standard.
There is another class of industry with which I am personally concerned—the production engineering industry—where the amount of cash which has to be carried varies considerably over a long period, particularly in the motor car and aeroplane industry. You cannot take one year and say that the average amount of cash you carry then is the figure. For instance, in making a model you have to put out a certain amount of cash at the start, and later you have to reduce this amount as the model is finished and then spend cash on making jigs and tools to start production. When the Chancellor of the Exchequer was Secretary of State for Air the aeroplanes that we have now were being talked about as models in the spring of 1939, when shops were being cleared to make way for their production. In due course those planes will fade out, and others will come in. So it can be seen that in manufacture of this description you have a cycle of cash which varies over a long period. We want the Revenue to differentiate between redundancy and reserve. If capital is redundant, of course we can understand that it could be taken out, but there is a great deal of difference between redundant and reserve capital, just as there is between redundant and reserve plant. The production engineering industry carries stand-by plant which is not used and which we hope will never be used, but that plant is not called redundant. It has to stand by in case of emergency. So it is in the case of this capital. When it is wanted at some period, we ask that it should be treated differently. The Revenue authorities should be empowered


to treat each case on its merits. Yesterday I heard the Chancellor advise people that when they had a problem they should take it to the Revenue officers. Personally, that is the advice I have always followed, and I have always had their help. One of them once said to me, "Do not think that we are ordinary tax collectors whose only duty it is to see that the State gets everything it should get. It is also our duty to see that the State does not get anything it ought not to get. I am here to look after your interests as well as theirs." I maintain that this new Clause would help the Revenue authorities in dealing fairly as between the State and individual firms in cases where such treatment is necessary.

Sir K. Wood: My hon. Friend has made a very clear statement of the position, and I am much indebted to him for the information which he has put before me and the Committee to-day. I will, of course, carefully study what he has said, but I would like to make one or two observations on the present position. The object of this new Clause, which relates to the treatment of money in computing capital for E.P.T. purposes, is to provide that money shall be included in such capital to the extent not only of current requirements but also of
such other requirements as may be necessary or advisable for the maintenance and development of the trade or business.
Some hon. Members will recollect that under the Finance Act, 1939, in computing capital for E.P.T. purposes investments are to be excluded, with one or two exceptions which I need not go into now, and any moneys not required for the purposes of trade or business are to be left out of account. That is an essential condition to prevent taxpayers being able, by keeping surplus money in the form of cash, to take advantage of what is a compratively high percentage addition which is allowed on increases of capital. That percentage is to-day 8 per cent. I think the Committee and my hon. Friend will agree that it would clearly be unreasonable that a taxpayer should derive financial advantage by receiving an allowance for increased capital at 8 per cent. in respect of money which is, in fact, lying idle at the moment. The exclusion of the money not required is designed to prevent that state of affairs.
My hon. Friend talked of money which might be required for certain purposes,

and it occurred to me that it ought to be quite possible, with all the forms of investment now available, for a firm to invest that capital in any one of the lines of articles which I have on my counter to-day. It is true that the law does not define what money is "not required" for the purposes of E.P.T., but the amount of surplus cash is determined in practice in the light of the needs of the business, due regard being paid to impending liabilities and the cash which may be expected to become available to meet them. It may be interesting to the Committee to know how, broadly speaking, the Revenue treat cash balances. They treat them as not required only so far as they include surpluses unused throughout the period under consideration; they do not seek to eliminate temporary surpluses absorbed during the accounting period, or cash representing the accruing profits of the period, or a reasonable margin for contingencies. I suggest that in that way the Revenue is meeting the position, having regard to the requirements of industry and the position of the taxpayers. I think my hon. Friend will see that if I acceded to his request and accepted his new Clause it would give an undue advantage.

Sir P. Bennett: I fully appreciate the point which the Chancellor has made although I thought I emphasised particularly the fact that capital which was redundant should be taken out. He hinted at what could be done with Surplus cash, and, of course, that is being done, but a certain amount must be always kept on call. It is only a matter of discussion with the Revenue authorities as to what is the essential amount. As I have said, a certain amount must be kept ready for immediate use and I commend that point of view to the Chancellor in begging leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Appeal against decision of Commissioners.)

There shall be added to paragraph so of Part I of the Seventh Schedule to the Finance (No. 2) Act, 1939, as amended by Subsection (5) of Section thirty-three of the Finance Act, 1940, the following subparagraph:
(3) Any person who is dissatisfied with a decision of the Commissioners under this paragraph may appeal to the board of referees."—[Major Gates.]

Brought up, and read the First time.

Major Gates: I beg to move, "That the Clause be read a Second time."
I am seeking the indulgence of the Chancellor in putting forward this new Clause, because my hon. Friend the Member for Stockport (Sir A. Gridley) had hoped to be here to move it himself, and I have only my recollections of talks with my hon. Friend to guide me in this matter. This Clause and the one that follows deal with the discretion of the Commissioners. We feel that in the paragraph referred to it is too limited. I wanted to put down a Clause widening their discretion, but it was finally decided to try to get the Chancellor to agree to a Clause giving a right of appeal to the Board of Referees. The sort of trouble that the Clause seeks to correct, if I may give an example, is the case of a company which was director-controlled before the war, but which is not controlled in the E.P.T. period. It usually has the directors' remuneration disallowed as if it were controlled, but the percentage on extra capital is reduced from 8 to 6 per cent. The company is therefore treated as director-controlled as far as the directors' remuneration is concerned and as non-director-controlled as far as the percentage on new capital is concerned. The Revenue thus has the best of both worlds. That is what the discretion of the Commissioners amounts to. And as it can be exercised either way sympathetically or harshly it was felt that it was only just and equitable that power should be given to the taxpayer to appeal to the Board of Referees.
Another example of what we are trying to get at is a company which was not controlled pre-war but is director-controlled in the E.P.T. period and has its standard reduced by deducting the directors' salaries, and its E.P.T. profit increased by adding those salaries. Here the discretion of the Commissioners is limited although they may give a countervailing advantage by the extra 2 per cent. which is allowed on increased capital. But there may be little or no increased capital so the 2 per cent. may be inadequate to cover the difference, and thus the discretion of the Commissioners is inadequate and not wide enough. So if the alternative of giving the Commissioners wider discretion is not taken it seems only fair that the taxpayer should have a right of appeal to the Board of Referees.

Sir Arnold Gridley: I do not think there is much that I need add after the very clear way in which my hon. and gallant Friend has moved the Clause. There is a wide desire to have the right to bring the decision of the Commissioners before the Board of Referees, and I think I might ask the Chancellor to be accommodating to us, because all we are asking for is that greater discretion should be given to the consideration of these questions and that, where injustice is felt, those aggrieved should have the right to go from the bureaucratic decision of the Commissioners to a Board of Referees, which, after all, has its justification and its being for the purpose of dealing with matters of this kind.

The Attorney-General: The general topic of the right of appeal from the Commissioners to the Board of Referees was discussed on the Finance Bill last year, and it was then pointed out that, in dealing with Excess Profits Tax, there are a number of cases, of which this is one, where you require to make adjustments to fit the particular facts of each case, adjustments which may depend on the amount of capital in the business and various other matters which do not arise in the case of Income Tax where you can apply a rigid code and express it in words. I was interested when the Mover said he and his friends had considered whether they should ask that the Commissioners should have a wider discretion or whether they should ask that there should be a right of appeal. That is interesting, because the Commissioners have frequently been pressed by those who are affected by this tax to take a wider discretion than they have at present to enable them to deal with special cases. The difficulty about an appeal is that, if you are going to have a right of appeal to a Board of Referees, you have to lay down a definite code of principles which they as a judicial tribunal, can apply. I believe on the whole, although of course the Commissioners' decisions have not given universal satisfaction, there has been no general complaint as to the extent of their discretion and, taking into account that if you have to decide something, you can never wholly please the people who come before you, I think they have not done too badly. I should have thought the subject matter of this Clause was a pretty good example of where it would be very difficult to formulate a general code. I do not


want to be too technical or to go into too much detail, even if I were capable of it, which I very much doubt, but one of the cases which would arise under the Clause is where a company was director-controlled in the standard period and not director-controlled in the chargeable period, or vice versa. There, it is right and proper and necessary that adjustments should be made.
We have to take into account such facts as, for instance, when the company was not director-controlled, what director's remuneration could be deducted and what was included in that remuneration, whether it to some extent, as sometimes happens, included an element of share of profits as well as remuneration limited to the directors' duties. We then get questions as to changes in the capital structure of the company between the two periods. It is for reasons such as these, which I will not attempt to elaborate, that last year the House decided—and I think the House as a whole accepted it after argument—not to give a right of appeal to the Board of Referees, not out of any disrespect to the Board, but simply because if we were to give this right we would have to formulate the code which the Board should apply.
Therefore, I am afraid we cannot advise the Committee to accept this new Clause. Whether it will satisfy my hon. Friends or not I do not know, but all we can say to them to-day is that if they think the 2 per cent. is inadequate or the use which is made of the discretion under Section 33 (5) (2) of the Finance Act, 1940, is not being exercised fairly, and if they know of a particular case or any class of cases which give grounds for reconsidering the matter, representations can of course be made to the Commissioners that they should use their discretion somewhat differently from the way in which they have been using it and so forth. We think it would be quite impracticable, however, to formulate a code to deal with this class of case, as with the others, and therefore an appeal to the Board of Referees is an impracticable solution.

Major Gates: I find-myself in a personal quandary, because I have been listening to my right hon. and learned Friend very carefully to see on which side he was coming down as between my hon. Friend the Member for Stockport (Sir A. Gridley) and myself. It rather seemed that if this new Clause had been changed

to give slightly wider discretionary powers to the Commissioners, we might have had a more favourable reply. I understand the reply to mean that the Commissioners, after the statement we have just heard, will give the broadest interpretation to their discretion. In these circumstances I beg to ask leave to withdraw the new Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Changes in persons of directors.)

There shall be added to paragraph so (1) of Part r of the Seventh Schedule to the Finance (No. 2) Act, 1939, as amended by subsection (5) of section thirty-three of the Finance Act, 1940, the following words:
Provided that if the standard profits of the trade or business are computed by reference to the profits of a standard period and the number or the persons of the directors in the chargeable accounting period have changed since the beginning of the standard period such increase in remuneration may be allowed as the Commissioners consider reasonable and necessary having regard to , the requirements of the trade or business in the chargeable accounting period."Ȕ[Major Gates.]

Brought up, and read the First time.

Major Gates: I beg to move, "That the Clause be read a Second time."
This new Clause is intended to apply to cases where at present, as far as I can see, the Commissioners have no discretion at all. We feel that E.P.T. by its nature depends on comparing the profits of the standard period with the profits of the period of liability, but it is axiomatic that like must be compared with like. No difficulty arises in achieving this object where the company has always been controlled by the directors and where the directors have not changed. The Committee will remember that where the company is under the control of directors their remuneration is disallowed in the standard period and also in the chargeable period. In other words, it is a case of comparing like with like, with the net result that any increase in remuneration is liable. The Finance Act, 1940, quite properly makes provision for the case where the company at one time has been controlled and at another time not controlled, and it does this by saying that no deductions shall be made in respect of directors' remuneration except in so far as the Commissioners otherwise direct. In other words, the Commissioners have discretion to do what


is just and equitable within the spirit of the Act. The object of this new Clause is to extend that principle and continue the discretion of the Commissioners to those instances where there has been a change or alteration in the persons of the directors. The Finance Act, 1940, does not cover that situation.
I want to give one example of what we are aiming at. Take the case of a man or woman who was a salaried employee of a company in the standard period and who has since become a director, though still carrying on the same duties as formerly. In the standard period that person's salary is deducted from the profits, thus reducing the standard, but in the chargeable period the director's remuneration, which may be exactly the same as the former salary, cannot be deducted from the profits, as it would be if it were a case of like with like and, therefore, fair and just, simply because his firm, comes within the definition of a company controlled by the directors and is a case where the Commissioners have no discretion. It will be seen from my remarks on the previous new Clause that I am a believer in the discretion of the Commissioners, and we seek to have that discretion extended to this sort of case. Yesterday we were chiefly engaged in the early proceedings in discussing football, and I have been careful to keep the score so far. The Chancellor has not had a single goal scored against him, but I believe that one hon. Member may have crossed the line for a try and will have a chance to convert on the Report stage and to obtain a goal. I am hoping that as this is the first time I have moved anything in this House, I have made some little impression on the Chancellor.

Sir K. Wood: I think that my hon. and gallant Friend gave the best reason for granting his request in the last observation he made. It is one which always appeals to me very much, and I wish I could accede to it. I hope that he will not regard the fact that some of the Amendments have not been carried as indicating that these Debates are a sort of contest between me and the Committee. I am always ready to meet the Committee whenever I can possibly do so, and it may be that as we progress a little a genuine goal may be achieved. I hope that after I have given an explanation of what the

practice is my hon. and gallant Friend will be satisfied about the position. As I stated on a previous Clause, under the scheme of the Excess Profits Tax the director-controlled companies are treated, generally speaking, on the same lines as trades or businesses carried on by firms or individuals. In the latter type of cases no deduction is allowable in respect of the remuneration of the proprietor or proprietors. It is therefore appropriate that in the case of director-controlled companies no deduction shall be made in respect of directors' remuneration. That accounts for the fact that by the Finance Act, 1939, as amended by the Finance Act, 1940, a provision of that kind has been made.
It is a fact that the law does not make any special provision for dealing with the case where there is a change in the number or the persons of the directors between the standard period and the chargeable accounting period, but where difficulties arise in such cases they are dealt with as a matter of administration, and such adjustments are made as may be appropriate to the particular case, bearing in mind—I emphasise this—the general principle that the company is to be dealt with on the same lines as a partnership. Thus, if a person was an employee in the standard period and became a director before the chargeable accounting period his remuneration in the standard period is normally allowed to be treated as not deductable, as would be the case in law if he were a partner in a partnership who had been a mere employee in the standard period.
I think I am right in saying that this matter, perhaps in the broader aspect, was considered last year, or on a previous occasion, and I have, replied to one or two of the organisations which have made representations to me by saying that if I accepted this proposal, it would involve the negation of the principle of treating a director-controlled company as if it were a firm. I would also point out to my hon. Friends that if it were pressed to its complete conclusion, it would involve the Revenue authorities in having to adjudicate on "reasonable remuneration" in practically all the cases, and this is obviously a task which they are not particularly anxious to undertake. I hope that with this explanation of what we do administratively my hon. and gallant Friend may be content.

Major Gates: I am not quite sure what the right hon. Gentleman means by "dealt with administratively." If I followed his remark correctly, it would seem that this point is sympathetically dealt with administratively—using his phrase. In that case his information and mine differ, because I have come across instances which have not been dealt with administratively in a sympathetic manner, and that is why we are asking for the Commissioners to have discretion in these cases. There is the obverse of the matter which I have not put: When a manager or important salaried employee of a director-controlled firm dies or leaves, in our present man-power situation the directors may not be able to replace him and may have to do his work themselves. That is what is happening in some small firms. Formerly they would have been able to deduct that late manager's salary from the profits, but if they do the work themselves, they are not allowed to adjust their remuneration for the extra work they do.

Sir A. Gridley: I want to put forward two points for the consideration of the Chancellor of the Exchequer. I am sure that he does not want to make it more difficult for industries which are hampered by the shortage of man-power at the present time. If directors go abroad on active service, or die, or are called up to help in some Government Department, it may be necessary to fill the vacancies. One does not want to go outside, but to reward men who have served faithfully and well for many years in some managerial position by promoting them to the board. I am sure the Chancellor does not want to do anything which will hinder that most desirable practice. In the second place, we must have regard to the fact that the Minister of Aircraft Production, and possibly other Ministers, may find it necessary to make changes in directors. There have been cases already in which this has been done, and where it is necessary no one quarrels with it. Ministers may desire to take managers from their managerial positions and put them into positions as directors or managing directors. Those are two types of difficult cases which we are anxious about. We do not want the balance-sheet of the concern to be adversely affected by most desirable changes of that kind. Therefore, I would ask the Chancellor not to make it more

difficult for some of us who are faced with this problem, and are hesitating to make changes which we think would be desirable and helpful to the national effort because of the adverse financial consequences which would follow.

Sir K. Wood: I will look into what both hon. Members have said in this connection and give consideration to it and communicate with them.

Major Gates: In view of what the Chancellor of the Exchequer has said, I beg to ask leave to withdraw the Clause, but I would like to say that what is worrying so many of us is this question of promotions. The Army, the Navy, and the Air Force all believe in the principle of promotion and the law as it stands may have the result of preventing promotion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Abolition of estate duties on agricultural land.)

From the date of the passing of this Act, estate duty shall not be levied on any land used for the purposes of agriculture.— [Mr. Colegate.]

Mr. Colegate: I beg to move, "That the Clause be read a Second time."
This Clause deals with a fundamental matter affecting long-term agricultural policy, on which I venture to urge that it is the duty of the Government to take a decision as soon as possible. The whole atmosphere surrounding this question has been greatly changed during the past few months by a remarkable series of reports which show great unanimity on certain points. In addition to that, there has been a change of attitude towards agriculture in many quarters, quarters which have not in the past been regarded as particularly favourable to agriculture. I refer to reports issued by the Federation of British Industries, the London Chamber of Commerce, the National Union of Manufacturers and, perhaps the most striking of all, the Wholesale Textile Association, who are quite emphatic in their recommendation that the restoration of British agriculture is essential to the future prosperity of the country. Those reports show the essential place that British agriculture must hold in the economy of the country.
Next I come to the expert reports, which tell us what is one of the main


features which will ensure the restoration of British agriculture to its rightful place in the economy of the country. I refer to the reports of the Royal Society of Agriculture of England, an expert body; to the Central Landowners' Association, an interested body who are entitled to have their views heard; to the sub-committee of the Conservative Reconstruction Committee, who have issued a remarkable report which has received favourable notice in every quarter; to the National Farmers' Union, which is very closely in touch with the whole situation; to another very remarkable report, signed by a group of peers of all political parties; and then to the Forestry Societies, the Royal English and the Royal Scottish; and lastly, but not least, in fact to the most remarkable report of all, the Scott Report, which, I gather from references made to it in this House, is accepted by almost everyone concerned.
Let me take first the report of the Central Landowners' Association. It is a very good report, and I advise everyone to read it. They say that it has already been pointed out that the incidence of Death Duties is the most competent cause of the break-up of agricultural estates, and they go on to say:
No more effective method of eliminating such estates could have been conceived. If it is accepted by the Government that the remaining agricultural estates should be retained then it follows that such a result can only be achieved by the remission of those duties where land is scheduled for the production of foodstuffs and timber.
When we are asking for the remission of Estate Duties on agricultural land, we understand that proper Regulations should be made to see that that land is only freed from Death Duties while it is used for agricultural purposes.
Now take the Conservative post-war reconstruction report, one of the best upon agriculture that has been produced for many years. It comes up against this difficulty almost at once. It says:
The most difficult to defend from an agricultural standpoint is Estate Duty. It is capricious and uncertain in its incidence. The accidents of life and death may give to one estate comparative immunity, while another feels its effects with crushing severity. In the absence of outside resources it can seldom be met without the break-up to a greater or lesser extent of the estate which is called upon to pay it. Again, under existing tax procedure the rate of tax will increase with the

size of the estate and with the total wealth of the owner, a position which may be just from the standpoint of the taxpayer, but which bears no relation to agricultural needs. Psychologically it is disastrous. The guiding motive of the best type of owner is regard for the permanent welfare of his estate.
I do not think that would be denied by anyone who has any knowledge of the conditions of the agricultural industry. The report goes on:
To such a man the knowledge that, on his death, taxation will destroy his life's work, cannot but have a most depressing effect. The evil effects of the Duties are not confined to the great estate. Equally onerous are the smaller sums demanded from the owner-occupier. To find them involves an inroad on working capital, which almost invariably impairs the future efficiency of the farm as a productive unit.
I come now to the report of the Royal Agricultural Society of England, a body composed of nothing but experts, and they make a very brief reference to the matter. They simply say:
One of the prime causes of deterioration of the countryside and the loss of fertility has been the incidence of Death Duties. It is impossible to withdraw from the land, at frequent and irregular intervals, large sums of capital without exhausting its power of reproduction which is vital to the nation.
I will quote just a sentence from the report of the National Farmers' Union. Farmers by no means see eye to eye with landowners on every question, and their evidence is really of great value. They say that before the war they had, in collaboration with the C.L.A., made representations to the Chancellor of the Exchequer with regard to the incidence of Death Duties on Agricultural land and the need for relief for expenditure for the maintenance and development of agricultural production. They go on:
The force of these representations has been intensified by war-time conditions and action in response to them should be an essential feature of the Government's long-term plans for the industry.
I come to the report of the Peers, who include one Socialist ex-Minister of Agriculture. They were quite emphatic. They said:
Death duties in their present form as applied to the owner of agricultural land are incompatible with the proper maintenance of that land. The maintenance of the present system of landlord and tenant (which leaves the tenant's capital free for working the farm) depends primarily on such relief from death duties as would arrest the drain on the landlord's capital, which should be at disposal for the maintenance and improvement of the fixed equipment.


I will not refer to the Forestry Societies' reports, which are equally emphatic, but will go on to the Scott Report. This matter was not within the Scott Committee's terms of reference, and therefore the Report did not make recommendations. When the Committee turned to the subject of rural amenities and the position of agricultural land in England however, almost the first thing, in the first few pages, upon which they were compelled to comment was the incidence of Death Duties. This body was not concerned with landowners at all. Their terms of reference concerned the future of agriculture and rural England. The Report says:
During the years before the war of 1914–18, as well as since, rising taxation and the incidence of death duties seriously reduced the ability of many landowners to make necessary improvements or to maintain their farms in good tenantable condition. Many estates became heavily mortgaged. To retain their farms many tenants bought them, often at high prices and frequently with borrowed money. This lock-up of capital in the land meant less money for working capital and became for many owner-farmers a source of considerable embarrassment when later the general world depression in agriculture brought low prices.
That is very remarkable testimony from the Scott Report.
Never has there been such unanimous testimony from widely differing interests and from such expert committees, such universal condemnation of the evil effect of Death Duties on agriculture, which is one of the major industries of this country. I would remind the Committee of the very wide difference there is between the incidence of Death Duties upon a money fortune and upon agricultural estates. If anyone leaves a large sum of money in a bank, the heir may very much regret that he has to draw a very large cheque in favour of the Chancellor of the Exchequer, but there is no difficulty about it. Unless that money forms the working capital of a business, or part of it, no harm is done to production. No business or estate is damaged. If you leave a large holding of shares in some company, some may have to be sold to pay the Death Duties, but that does not affect the company by a single farthing. If you are lucky enough to inherit some shares of the Imperial Tobacco Company, the money for the Death Duties is not provided from either the working capital or the fixed capital of the company but

is provided by other members of the public, who purchase the shares.
Take the case of a man inheriting an agricultural estate. If he has not large outside resources, he must break up the estate, and that does no good to agriculture whatever. On the contrary, it does an enormous amount of harm. He may exercise the option, which the Treasury give him, of paying over a series of years. That is no help to the question from the angle from which I regard it, namely, the prosperity of British agriculture, because what does it mean? It means, because the net income is not high compared with capital value, that over a series of years the heir is short of money and is inevitably tempted to starve the estate, cut down on the repairs, and generally do little draining, etc., and thus seriously impair the fertility of the land. Whatever means he adopts he has to do one of two things, eat either into his fixed capital by disposing of part of the estate, or into his working capital by withdrawing money from it.
This question, I know, has been raised many times before, but, I would remind the Committee, never in the circumstances in which it can be raised to-day. This is the first opportunity, this is the first Finance Bill, on which we have the right to press upon the notice of my right hon. Friend the cumulative effect of these expert reports which I have quoted. The question has been raised before, and I just want to refer to that, because it has a considerable bearing upon the decision which I think the Chancellor ought now to take. In passing, I may say that the venerable and illustrious author of those duties, the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) said—[Interruption.] Ah, yes, but they were not on the scale which we know, and which affect agriculture. I am refer, ring to the time from 1909 and 1910. The author of these increased duties, I should have said, has said that agriculture is too heavily taxed. No one could fail to see, including the right hon. Gentleman, that these Estate Duties were heavy and had an extremely harmful effect. This was brought out very clearly in the Budget Debates of 1925. I may remind the Committee that the Chancellor of the Exchequer of that day was my right hon. Friend the present Prime Minister. The Death Duties were increased, but as a result of


debate, as a result of the evidence then brought of the damage being done, a concession was made, and the Death Duties on agricultural land were not increased in the 1925 Budget. From that day to this there has been no increase. Every succeeding Chancellor of the Exchequer has had to maintain this differential rate for Death Duties on property and on agricultural property. I think I am right in saying that the scale to-day is the old scale under the Finance Act, 1919. Nobody has dared to change it, although the rates have been put up on every other form of property, because it has been recognised by Chancellors of all parties that the Death Duties were doing an extremely large amount of damage to the agricultural industry of this country.
The total amount raised by these duties is not large. Taking it in general, I think I am right in saying it has never been higher than £4,000,000 in recent years, and I think it has frequently ranged between £1,000,000 and £2,000,000 a year. That is not a very serious amount in a Budget of the £1,000,000,000 mark. I am not going to translate it into terms of battleships or bancors. I prefer to deal with the old-fashioned pounds, shillings and pence. Nor will I refer to destroyers. It must be realised that although the total amount is not large, seen as an item in the national revenue, the effect on individual owners is crushing, because this is not a tax of £2,000,000 or £3,000,000 or £4,000,000 levied over the whole of the agricultural estates of the country. It depends entirely upon the chances of death. Some estates, large estates, having landlords capable of keeping those estates in first-class repair, may go on for years without paying a farthing towards this levy, whereas a neighbouring estate may have to pay these duties in respect of two deaths in a very short period of time. Anyone who has seen, as I have, the effect on an estate of two deaths in a short period, will know it is disastrous, not only to the man who inherits, but to the tenants and to the people in the villages concerned.
I have dealt with that point. It may be said, "You have pointed out the evil and damage that this tax does. Surely someone must benefit?" I entirely agree; someone does benefit—two groups, indeed three. Two great groups benefit, mainly.

They are the jerry builders and the land speculators. These duties are the charter of the land speculator and the jerry builder. I take an estate within my own knowledge, within a few miles of my own home. I passed through it recently. There was a beautiful house, there were wonderful woods. The people could not stand up to the effect of the Estate Duties. They threw in their hand altogether. A land speculator bought the whole thing, lock, stock and barrel. Pass that place to-day—windows empty, woods cut down, everything disposed of, men who have been employed in the neigh-hood discharged. What more would have happened if a foreign enemy had taken that place? Hitler, in his attacks on England, made a threat. He said, "I am going to destroy every country house which is starred in Baedeker." It was quite unnecessary. The Treasury are going to destroy the houses and contents of every house starred in Baedeker. They are doing it. When I was in America some time ago I noticed near the shores of Lake St. Clair, near Detroit, two Elizabethan houses, which had been sold in this country, taken down and re-erected there stone by stone, brick by brick. It was a horrible sight to me. They looked forlorn. I say, "Why should Britain sell its birthright and heritage in this way?"
At the risk of wearying the Committee I must, having dealt with the primary effects, just deal with the secondary effects of this iniquitous tax. You will see in the "Daily Mail" to-day the headline "America buys the family treasures." How true that is. How true it has been ever since these Death Duties have been in operation. The fact is that anything of high excellence in the way of furniture, pictures, books and manuscripts is one of the commonest forms of raising Death Duties at the present time. Many owners of estates feel that, to use an old-fashioned phrase, they have to do their duty to the land. They try to maintain the estate for their children, for the workpeople, and for all concerned. Therefore, their tendency is to look around, and to say, "What about the pictures; what about the other old treasures? We are offered so much for them." That is going on on a large scale, which I am sure a number of people in this country have not recognised. I am not looking now at the international art collections; I am talking of our native indigenous


genius, the Romneys, the Raeburns, and others that you will find in the country houses of England. I am not talking about Matisses and that sort of thing, but of the native arts of England, the furniture made by Englishmen for Englishmen, the portraits painted by Englishmen of Englishmen—and by Scots, too; take the wonderful Raeburns that you can find about the country to-day; or that you could find once. Take the simple case of the Shakespeare folios. In many country houses there was an old Bible and a first folio of Shakespeare. I am well within the facts when I say that 95 per cent. of these folios are in the libraries of America. If you want to pursue Shakespearean bibliographical research to-day, you have to go to America to do it.
Is it wise to let your heritage go like this? This land and all its treasures of architecture, art, furniture, books, manuscripts, and what you like, have been handed down not for our own personal disposition, as many people think, but in trust for those who come after us. One of the questions we must ask about any statesmanship and any taxation is, what is the physical result? Is the land better, and are there more good houses large and small, or has the land degenerated, and have the houses gone out of repair; are the people living on their capital? An American said to me, "We Americans are the residuary legatees of the whole of English art." It is perfectly true. They have already got a large quantity of it. I press this matter most strongly on the Chancellor.
I have spoken at length, and I will sum up my argument very briefly. First, I have demonstrated that all expert opinion agrees that the effect of Death Duties is disastrous to the capital structure of agriculture. Is there anyone who denies that? Secondly, I have shown that all reports dealing with this subject, from whatever quarter they come, recommend the immediate abolition of these Death Duties. Thirdly, I have shown that the secondary effect of these Death Duties, namely, the putting of the whole of the country houses of England in pawn, is a disastrous step, and that it should be stopped at once. Lastly, the total amount of money accruing to the Treasury is not great. Had I more time I could have shown that it is very doubtful whether there is any net gain to the Exchequer,

because, as a result of this exhaustion of capital, it has been necessary to pay subsidies for drainage and other purposes which might have been avoided had a more statesmanlike course been followed. This enormous damage is, I think, more important than any question of mere pounds, shillings and pence. It Is our heritage that we are selling lightly. We must not do it. I appeal to my right hon. Friend to see whether he cannot accept this Clause, and, if he cannot, to promise us such consideration that we may hope that the new long-term agricultural policy of England is going to be based on a system of taxation which will not exhaust the fixed capital of that industry.

Sir K. Wood: I would like to congratulate my hon. Friend on a very fine effort, and a very persuasive one. He will not expect me, however, to make an announcement on this matter to-day. As he said, the reports which he has quoted are under the consideration of the Government, and they are one of the matters which will have to be considered in connection with the Government's policy on agriculture. This, I think, will be some comfort to him. His speech will be available to my colleagues and myself when we consider this question, and I can assure him that we shall give it the greatest consideration.

Mr. Douglas: There is not a single argument which can be brought forward in favour of this proposal which cannot be brought forward for reducing the Death Duties on many other kinds of property. If it is true that they injure the interests of agriculture, it is equally true that they injure the interests of other industries. The hon. Member has attempted to escape from that dilemma by saying that in the case of industry ownership is very often vested in shareholders, who can sell their shares without affecting the actual control and conduct of the undertaking; but that applies in the case of agricultural estates. Every one of us knows that scores upon scores of agricultural estates have been turned by their owners into limited liability companies, to deal with this very problem. It is open to them to continue that process as far as they please. In that way the continuity of the company's ownership can be maintained, and the problem of raising the money can be dealt


with by disposing of the shares, in precisely the same fashion as owners of shares in an industrial undertaking deal with the problem of paying Death Duties. In fact, there is no other object in this country which is dealt with so tenderly, so far as Death Duties are concerned, as is agricultural land, which is taxed upon a lower rate than other property, and on which the owner has an option, which is not given to any other payer of Death Duties, to pay the amount of the taxation by instalments spread over a number of years.
It is said that this taxation is a burden upon agriculture—a burden, that is, upon the industry on farming—but there is no proposal from the hon. Member to exempt from the burden of Death Duties the stock-in-trade of the tenant farmer, by which he carries on the actual operation of farming. It is only a proposal for exempting the owner of land from Death Duties upon the land. Let us not forget that the land is made up of two elements. There is the land itself, and there are the buildings and the other improvements which have been made to it. If there was a proposal to distinguish between those two things in order to encourage the provision of improvements, quite a good case could be made out. The Scott Report, to which reference has been made, contains a series of proposals that there should be a fresh system of valuation which would make that distinction between the land itself and the buildings and improvements which are placed upon it. If such a distinction were made, there would be an opportunity, not only in this case, but in other cases, to make a distinction between the actual contribution to production and the ownership of a natural resource which has not been created by anybody.
Let us assume for the sake of argument that Death Duties on agricultural land do to some extent fall upon persons who are actually conducting the business of farming. It is not a serious burden placed upon that industry. The amount in question is comparatively small. For the past 20 or 25 years the amount of Death Duties collected in respect of agricultural land has fallen to about half what it was. The amount now collected, something over £1,000,000—and I speak from memory—is only a very small part of the agricultural output of this country, which is well over

£250,000,000. Therefore, this amount is of the order of much less than 1 per cent. of the agricultural output of the country. It is useless to suggest that the condition of agriculture is seriously influenced by the effects of this taxation. Reference has been made to the break-up of great estates, and something may be said for that in some cases, unless we are all prepared to stand by a system in which the ownership of the land of this country is concentrated in the hands of a comparatively few individuals. I question from the very foundation the soundness of an argument of that kind unless we believe in a state of society in which there is a great gulf fixed between those who have large possessions and the mass of the people of the country.
I sympathise with those who wish to preserve many beauties which have come down to us from the past, but the dispersal of these artistic treasures is not due to the incidence of Death Duties upon agricultural land. It had started long before the Death Duties on agricultural land came into existence and before they had attained any significance whatever. The Huntingdon Library in California, to which the hon. Member referred, has one of the most marvellous collections of ancient documents. The Battle Abbey deeds were sold by the owner of the land more than 100 years ago, before any question of Death Duties came into consideration at all. If owners of land desire to preserve these things for the benefit not of themselves, but of the nation at large which has contributed out of the rents which it paid to the owners of agricultural land, there are means open for them to do so. They can hand over their property to the National Trust in order that it shall be preserved for the benefit of every one of us. There is no reason why those who feel patriotic in this matter should allow artistic treasures of that kind to be dispersed. I hope that the proposal which has been made will be looked at from all its aspects—from its economic aspect and from the other aspects which have been mentioned—and in the light of the fact that every proposal of this kind means that more taxation has to be placed upon somebody else in order to improve the conditions of those whom it is hoped to benefit.

Major York: I would not have risen had it not been for the speech to which we have just listened, but I feel that


there is a fundamental misunderstanding on this problem. It is looked upon by hon. Gentlemen opposite as a problem of ownership. It is nothing of the kind. It is a problem of management. If we can only realise that the management of an agricultural estate is just as important to the agricultural industry as the management and physical use of the land itself, we might get a better and a truer realisation of the proper function of the landowner. The hon. Gentleman referred in particular to estate companies and the shares which could be sold in the same way as industrial shares. I ask the hon. Gentleman to disabuse his mind of the fact that the shares of estate companies, if they are sold, do not have any effect whatever upon the management of that estate. They have just as direct an effect on that estate as if the company had not been formed. I myself am a land agent, and I have entered into many negotiations on the subject of the formation of estate companies, and I have never been able to see any advantage in that form of alteration. But a lot of people have done so, I agree. It does not affect in any way the unfortunate incidence of Death Duties so far as the capital in the estate is concerned. If shares have to be sold, then land has to be sold in order to realise the shares.
Another point that the hon. Member made, that there should be along with this suggestion an alleviation of burdens on the farmer's stock, is entirely a different one. if a farmer has to pay the duties, he first of all pays on a very much lower capital value, and consequently his stock is far more realisable than that of the landowner. The real point is that, in my experience, it is almost invariably the large estate in a ring-fence which is efficient, both economically and technically. It is a large estate which has all the advantages of a central workshop, a central maintenance unit and a central executive management. Wherever that ring is broken and the estate is reduced in size you get inefficiencies creeping in. The effect of Death Duties is that in almost every case the farm or farms on the outskirts of the estate are first sold off. Each of those farms goes to probably one owner, or perhaps one man buys all of them. Almost invariably he buys for investment what will give him 5 per cent. on his money. That is one principle that

has done more damage to the agricultural industry than anything else.
It is this desire on the part of men and women who have no feelings for the land at all and who regard money put into agriculture in the same way as money put into investments that is ruining the industry. These people have no idea how to manage land as it should be managed, with the result that there is an increase in the number of speculative builders and investors. Hon. Members who live in the north of England know that some years ago there was an organisation called "The Forty Thieves," who used to go around buying up the estates of large owners who could no longer afford to run them, break them and sell bits here and bits there to speculative builders, bungalow proprietors or roadside garage proprietors. So, slowly and inexorably our countryside was wrecked and ruined. I hope the Chancellor will consider favourably the suggestion so eloquently put forward by my hon. Friend in this Clause. I ask him to remember that we have one prime national asset in this country—the land. Practically everything else is artificial and man-made, but the land will remain, and everything we can do now and in the future to improve it and to make landowners more efficient and more sensible of their responsibilities is all to the good of the country.

Mr. Boothby: I would not have risen had it not been for the fear that some confusion may have arisen. The speech of my hon. and gallant Friend the Member for Ripon (Major York) may have led some people to suppose that he was strongly against small ownership or even-medium-sized owner-occupiers of land. I am sure that is not the impression he wished to give.

Major York: No.

Mr. Boothby: There has been a spread of owner-occupiership in Scotland for the last five years, with very satisfactory results. Both the Mover and the Seconder of the new Clause seemed to suggest that the only way land can be farmed was solely through large estates.

Major York: I am glad my hon. Friend has allowed me to correct the impression which he suggests I gave. My hon. Friend who moved the Clause did refer to owner-occupiers' capital being taken up.

Mr. Boothby: The hon. Member for North Battersea (Mr. Douglas) also seemed to confuse the Clause with the method of valuing land. He mentioned the Scott Report. I do not think that was in the mind of my hon. Friend who moved the Clause. I am satisfied that as a result of the Scott Report there will have to be a different method of valuing improvements to the land, but that is not directly affected by the Clause under consideration. It would be a pity to confuse the two issues, because it might be thought that anybody advocating the abolition of Estate Duties on land was opposed to any change in the method of valuing the land, particularly any method of valuing improvements to the land. That is not the case at all. The argument which can be adduced in favour of this Clause is that this duty is an arbitrary tax that may fall at any moment with crushing effect on a particular estate, which may, for the time being, be knocked out. There may be two or three deaths in rapid succession, with the result that there is no capital for development for perhaps 20 or 30 years. I do not think we can continue indefinitely under this system. As has been said, Death Duties falling in that way are a gift from on high to the land speculator as such, not to the farmer who wants to buy his own farm, but to the man who wants to break up an estate and sell it to a jerry-builder for the sole purpose of making as much money as can be made in the shortest possible time, thus doing irreparable damage to the countryside.
Nobody can doubt that there is need for capital in agriculture. The sum involved is trivial in relation to the results which could be achieved; as against the subsidies which have now to be poured out for land drainage and almost everything else, the cost to the Exchequer might be trivial. I am convinced that there are in the long run only two alternatives confronting this country—the remission of Estate Duty on agricultural land as such, and the nationalisation of the land. I do not see any other way of getting the necessary capital into the land of this country. That is an issue which may have to be fought out in the years which lie ahead, but that something must be done now I have not the slightest doubt.

Mr. David Adams: Nothing astonishes me more than the boldness of

a certain section of Members. of this House and we have had an admirable illustration of that to-day from the hon. Member who moved this Clause. At a time when the Chancellor is raising considerable sums of money from the poorest classes of the community, against which many in this House have dissented, we have this privileged section in the matter of monetary standing coming here and asking for a remission of taxation on agricultural land. I suppose it is evidence of the buccaneering spirit that has been utilised in industry with very good effect in certain spheres, but to request that the most prosperous industry in the country to-day should be relieved of any part of its proper taxation is astonishing. The hon. Member who moved the Clause was careful to blend together landowners and agriculturists, and I am quite agreeable to that, but the quotations he gave were very prejudiced. It was significant that he did not seek to put the position of agriculture as it is to-day—prosperous, fortunate and well-favoured by the community and the State——

Mr. Boothby: After 20 years' depression.

Mr. Adams: That may well be the case, but surely we cannot argue from the position as it was 20 years ago.

The Deputy-Chairman (Mr. Charles Williams): If we did, I think we should be going very far beyond the Clause. I would ask Members, as the Chancellor of the Exchequer said he would go into this from another angle, whether it might not be well to get on with the Bill.

Mr. Levy: On a point of Order. Is an hon. Member precluded from referring to something which may appear prima facie irrelevant but, nevertheless, is absolutely relevant in the development of an argument? If that is to be ruled out, the Debate will be stultified.

The Deputy-Chairman: I do not think I ever ruled that at all. My suggestion was that we seemed about to go a long way down a side line, which might entirely stultify the Debate and bring it outside this Clause, which is not very wide.

Mr. Adams: I have no desire to digress but it seems strictly logical that, if it is


desired to relieve agricultural land, and most other land, some argument should be evolved for the purpose. If agriculture and agricultural land are in a depressed state, the depression extends to other forms of land, but we have had no such suggestion made. The fact is that taxation, generally, is being distributed with a very heavy hand upon all sections of the community, and the layman would assert that there is one section of the community, namely the agricultural, which ought to feel this tax least of all. They have been the favourites of fate and of Parliament, not only of this Government but of previous Governments. Vast sums have been conceded to agriculture as free gifts. These were grants not from high Heaven but from other taxpayers. We have had controlled prices, guaranteeing to agriculture certain specific profits, which the State has not guaranteed to any other section of the community. We have given the free use of implements, lime, fertilisers, and the remission of local rates.

Mr. Colegate: We are not asking for the remission of Income Tax and Super-tax. We are talking of capital taxes—Death Duties.

Mr. Adams: I am not aware that I mentioned the remission of Income Tax or Super-tax. I am stating that there are these remissions of local rating and differential duties. The working classes, though they may not have many exponents here at the moment, are feeling the same burden of which agriculture is improperly complaining, and no evidence has been submitted to indicate the reasonableness of further remissions for agriculture, which is one of the most prosperous sections of industry. Industrial workers suffer not only through direct and indirect taxation but, in addition, have the burden of unemployment, which is perhaps the heaviest of all. We are promised that that will cease to fall upon them but we have to live and see whether that will be so under the capitalist system. If we indulge in the luxury of great wars in rapid succession, can we expect that these will be paid for, without the levelling down of those who have been in a privileged position in the past? We can only hope that the levelling process may not be too rapid, or indeed that there will be a levelling up rather than a levelling down. The proposals of the Clause would place an

additional burden upon the rest of the community in the interest of agricultural landlords.

Mr. Quintin Hogg: I rise to make an appeal which I hope may have some effect on the party opposite. I quite understand how the Clause cuts across a good many of their pre-conceived ideas. Since I have been in the House I have often learned a very great deal from their practical experience in certain matters and have changed my preconceived ideas. I trust that they will look at this matter without prejudice and see that there is more in the argument of supporters of the Clause than perhaps they thought. The last speaker treated this as a case of remission of taxation. It seems to me that that is a total mistake. At the present rate, taxation is not simply a question of raising revenue. It is a great instrument of policy, and our case is that this instrument of policy is unfairly affecting one of the great industries of the country. It Is true that, so far as immediate profit is concerned, so far even as capital in the sense of working capital is concerned, agriculture is, for the moment, prosperous, but our case is that the heavy, long-term capital industry is not prosperous, and the reason is the incidence of Estate Duty.
The hon. Member for North Battersea (Mr. Douglas) suggested that there was no single argument that could be applied to agricultural land which could not equally be applied to other forms of land ownership, but that ignores the real character of the capital structure of the agricultural industry. I can cite a case where the owner of a great estate and the owner's son died within a week. Next door there is an estate owned by a college. It has plenty of capital, because a college never dies, while the estate owned by the landowner has been starved of capital, because it has paid double Death Duties. As matters stand at the moment, the capital structure of agriculture demands money from the pocket of the landowner in a sense that other forms of industry and capital investment do not. Whether that is desirable or not I do not propose to inquire, but it is the fact.
It is said by hon. Members opposite that they do not approve of that form of society and that they do not want a dif-


ferential form of society in which great landed estates exist in private hands. I am not at this moment arguing against that point of view. I do not say that I support it, although I have greater sympathy with it than hon. Members opposite think. What I say is that this Finance Bill is not an instrument for upsetting the social structure of the country or fundamentally altering it, and what cannot be justified is retaining the present social structure and preventing it from working efficiently. If you want to alter it, alter it by a proper Measure which will restore a proper balance in another way, but do not keep it on in such a form that it cannot operate efficiently. I therefore ask hon. Members, whatever their views, to regard a new Clause of this kind sympathetically, because it is conceived on the basis of the existing structure of society. The arguments against it are based on a misunderstanding of the capital structure of this industry.
One hon. Member suggested that landowners should hand over their property to the National Trust. The National Trust is not designed as a manager of agricultural land. It may have to undertake work of that kind from time to time in the course of its business, but it is not an instrument designed to take over agricultural land. It is not fair, while we have a system of private property, to turn to one particular class of property owner and say, "We are going to allow people who have their money in shares to continue as private owners, but because you own agricultural land you must give up everything you have." Therefore, I ask hon. Members, without prejudice to their general convictions, which I am not disputing at the moment, to give the new Clause the sympathetic consideration it deserves.

Mr. Woodburn: I say, frankly, that there is a certain amount of tragedy in the break-up of great estates, but I see a fallacy in arguing that the cure for that is necessarily this proposed Clause. This is a question of national planning and public policy in another direction altogether. I am sure that the Chancellor during the proceedings on this Finance Bill must have been surprised at the number of innocent, helpful people whom he has been punishing and penalising by his

taxation. According to one of the arguments used every great landowner has been a benefactor who has held the land together and it has only been the wicked speculators who have broken it up. I know a number of cases in which the reverse has happened, in which the great landowner himself has taken advantage of every development of the community and exploited it by ribbon development and by selling his land to house speculators and making the most out of it. I suggest that he is not in the same category as people who are making profits in other directions.

Mr. Colegate: It was never suggested that he was.

Mr. Woodburn: The suggestion was that the landowner was a person of great generous public spirit, but we have to take landowners as a mixed variety—the speculators, the gamblers and all the other people mixed up in the community of landowners.

Mr. Colegate: The hon. Member has missed the point altogether. I was not talking for the great landowners but for all landowners, most of whom are small men. The imposition of Death Duties gives the opportunity to the jerry-builder and the land speculator. There are landowners who speculate, but they are driven to speculation by the Death Duties.

Mr. Woodburn: Surely there are other ways of sharing out the land than by selling it to speculators. Somebody has referred to the formation of a company. There is no reason why a landowner should not form a company and sell shares in it and still keep control of the land. If there is a profit, he can distribute the profit instead of the land. We have to realise that land is a big capital institution. If it is a question of perpetuating the control by one individual of hundreds of thousands of acres and to some extent the destinies of people upon that land, that is a position that has to be considered, but it is not a question of Death Duties. The Government and the people as a whole have no right to subsidise that system at the expense of people less able to bear the burden. So far as I can understand the system of taxation and Death Duties in this country, it is as fair as anything that can be devised. It is for the person who has land to make


such arrangements that he can meet his obligations to the community in the proper way. It may be that if two or three deaths take place in rapid succession hardship arises, but hardship arises too in regard to a soldier's estate, if both father and son are killed in the war.

Mr. Hogg: The point is not the hardship to the individual but the damage to agriculture.

Mr. Woodburn: The point surely is not the question of relieving a person of a financial obligation but a question of the Chancellor and the Government introducing some arrangement by which if the Death Duties involve the sale of land in a way which will harm the country, some arrangement should be made by which the Government could be able to take over the land. We have an instrument in the county agricultural committees, and I see no reason why they should not take the place of the National Trust so that if a person cannot finance the payment of his Death Duties, the community as a whole, through the Chancellor, should be able to take over the land in trust under the management of the county agricultural committees. This would solve the problem of the breaking-up of estates and ensure good management. There is no guarantee that a landlord is a good manager of land. There may be landlords who are good managers but there are also bad ones. During this war the community has had to see that the land is properly managed by taking it out of the hands of many landlords. The question of efficiency is not guaranteed by the individual ownership of land. I agree that we ought to have efficient management of the land, but it must be guaranteed by public policy and run by the public and not left to private individuals who may or may not be efficient.

Sir K. Wood: May I appeal to my hon. Friends to proceed with the Bill? We have had a useful discussion on this matter but I am anxious to have adequate time for the consideration of the remaining new Clauses. This has been a general discussion and I think that the observations I made were generally satisfactory to my hon. Friends. In these circumstances, I would ask them to allow us to proceed.

Mr. Colegate: May I just say two sentences with regard to two points that have been made?

The Deputy-Chairman: The Chancellor has made an appeal to hon. Members to end the Debate, and it is only fair to other Members who are giving way that the hon. Gentleman should not continue to make points which have already been made several times. I appeal to him to take the wider view and let the Debate end.

Mr. Colegate: I was not going on to argue but only to correct a statement. In view, however, of your appeal, Mr. Williams, and in view of the satisfactory statement made by the Chancellor, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Standard Profits where there were no profits in standard Period or profits in that period were low.)

"The references in Sub-sections (5) and (6) of Section twenty-seven of the Finance Act, 1940, to 6 per cent. shall be amended to 8 per cent., and the references to 8 per cent. shall he amended to 10 per cent. This Section applies to any direction of the Commissioners in respect of the standard profits of a trade or business for any chargeable accounting period ending after the end of March, nineteen hundred and forty, subject, however, as respects any such chargeable accounting period which begins before the said end of March to the provisions of Section thirty-three of the Finance Act, 1941."—[Mr. Colegate.]

Brought up, and read the First time.

Mr. Colegate: I beg to move, "That the Clause be read a Second time."
This new Clause deals with a comparatively small question and concerns almost entirely small businesses. At the present time a small business which had no income during the standard period is limited to earning 6 per cent. on its capital, and on new capital which is raised it is allowed 8 per cent. I am not going into this subject in any detail, but I ask the Chancellor whether he cannot increase the 6 per cent. to 8 per cent. and the 8 per cent. to 10 per cent. The businesses concerned are mostly small businesses which underwent difficult experiences or else were in a period of development. Many of them are paying out in taxation more than the total amount of the income left, because they are only allowed 6 per cent., which is 3 per cent. after payment of Income Tax, and they are not allowed to deduct for Income Tax purposes their


war damage premiums and certain other payments. The result is that there are actual instances of businesses, almost entirely very small businesses, where the 6 per cent. does involve the company, after the payment of tax, in an annual loss.

Sir K. Wood: I regret that I cannot advise the Committee to accept this Clause. At this stage I cannot, I am afraid, increase these allowances. I should be in further difficulty if I did so in this case, because if the rate were increased to 10 per cent: the capital of the company would be treated in the same way as new capital, for which at present we are allowing 10 per cent. There was a special reason for that, and that was to encourage capital coming into a business, but if I were to accept this Clause the next thing would be that some of my hon. Friends would come along and say, "We want another 2 per cent. for the new capital," and I should then get to the question of having to allow 12 per cent. I hope the hon. Member will appreciate my difficulties, but I really cannot take this matter further.

Sir A. Gridley: I really do not think the Chancellor can expect us to be satisfied with the explanation he has given. I am sure that he does not want injustice to be done, as it is being done at present, to many industrial undertakings, and not only small ones. There are many firms who are in the fortunate position of having had during the standard years very satisfactory profits, which enabled them to pay in pre-war years 10, 15 or 20 per cent. dividends, and it is quite easy for them in the war years to continue to pay such dividends; but there are other concerns which were in the stage of development or were going through a period of depression in the pre-war years and had no profits at all. Their standard was so low that in present circumstances they are contributing immeasurably to the national effort and yet getting less than nothing for doing so. It would be quite easy for the Commissioners of Inland Revenue to bring before the Chancellor convincing facts showing the gross unfairness of the present system towards this type of undertaking. I doubt very much whether, when it was originally suggested that 6 per cent. or 8 per cent. should be a reasonable return on the capital, it was

ever expected that we should reach an Income Tax of los. in the pound. If a company makes 6 per cent., the Income Tax reduces it to 3 per cent., and after you have to take out of the small residue the compulsory contributions towards war damage and pay what may be quite a reasonably small reward to the directors of the company, who may be whole-time directors. What inducement is there to such a concern, apart from the impelling motive of doing what they can for the national effort, to expand their business when they will get absolutely no reward?
Further than that, capital has been found by private holders of capital for the development of these businesses at a time when they will receive only this puny reward, and they have no idea whether that capital itself will not be lost or will depreciate considerably after the war when the type of business now being carried on may no longer be required or there may be only half the present volume of work. If the Chancellor wants to do justice all round, he ought to take this special case into consideration. All we are asking for is recognition to the extent of a miserable per cent. It does not sound very much, but it does make a difference whether you get 3 or 3½ or 4 per cent. on your money. In view of the moderation of the demand behind the Clause, I ask the Chancellor whether he will not soften his heart instead of keeping it quite so hard.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Expenses deductible from earnings of Women's Land Army.)

Rule 9 of Schedule E of the Income Tax Act, 1918, shall apply to the assessment of the earnings of the Women's Land Army, and the amount expended by a member of the Women's Land Army on her board and lodging at or in connection with her place of employment may be deducted from the earnings to be assessed.—[Mr. Brooke.]

Brought up, and read the First time.

Mr. Brooke: I beg to move, "That the Clause be read a Second time."
My hon. Friend the Member for Thirsk and Malton (Mr. Turton), in whose name this new Clause stands on the Paper, has asked me to apologise to the Committee for his inability to be present at the time when it has come on. The Clause deals with the emoluments of the Women's Land


Army and calls attention to an anomaly which is apparent there as elsewhere. I will state it in general terms. A girl in the Women's Land Army may live oh a farm, in which case she will receive board and lodging from her employer and a salary in addition. Alternatively she may live out, in which case her money emoluments will be increased because she will receive a board and lodging allowance. Under the Income Tax Acts, if a person receives free board and lodging as part of his or her emoluments, no tax is chargeable on that part of the income which is income in kind, but if the same person, instead of living at her place of work, lives elsewhere and receives an additional allowance to cover the extra cost of her board and lodging that allowance, though it is to meet a quite definite expenditure, becomes taxable. I think the Chancellor will agree with me that not only in this case but in many other cases, the Income Tax law is operating inequitably between one person and another, in the sense that it is discriminating against those who receive board and lodging allowance. If board and lodging allowance were paid direct to a hostel where a woman lived, then that sum might not be included for tax purposes on the ground that it does not at any time pass through the taxpayer's hands.
There is another anomaly apparent in the difference between the treatment of the Women's Land Army and the treatment of the women's Services. I know that the Women's Land Army are civilians and the girls in the A.T.S., the W.A.A.F. and the W.R.N.S. are not. The Government use that argument to justify differentiation of treatment between them. But I do not think any of us are quite happy about this matter, and it is because my hon. Friend has had hard cases brought to his attention—and so have I, in another sphere—that we ask the Chancellor what he intends to do to remove the discrimination.

The Attorney-General: There is undoubtedly, and there has been for some time, an anomaly—if that is the right word—arising from the fact that if a person gets board or board and lodging, as part of the consideration for work, it is not evaluated in money and taxed as income. The first case that came before the court was that of a bank manager for whom accommodation was provided in

the bank. That fact was reflected in his salary. As between him and, say the headmaster of a grammar school living next door, one might have said that that was unfair and you would have upgraded the bank manager rather than scaled the other man down. Undoubtedly the vast bulk of people in this country pay rent after their income has been taxed. That is the general rule. In the special class of cases where somebody gets free board and lodging these people are really getting a windfall. The Royal Commission on the Income Tax suggested that, in the interests of the principles of logic, efforts ought to be made to see that board and lodging was assessed as income and so evaluated. That has never been done, partly because of the great practical difficulties and partly because it has been thought that it was better for a few people to be lucky rather than to introduce great complications.
Take the case of any domestic servant in the country. If you are really going to evaluate on logical principles what she is getting you have to take into account the fact that she gets free board and lodging. That might bring her above the Income Tax limit in these days. Take a man-servant. One man-servant may get so much a year, live in the house and have board and lodging free, while another man has a cottage and gets a larger sum, but has to pay rent for the cottage. It has been found impracticable to deal with the anomalies by scaling up one set of people and trying to assess the value of their board and lodging. The case of the Women's Land Army is simply one case in a very much wider problem and it was realised that my right hon. Friend could not tackle it, certainly not an the lines suggested in the proposed new Clause.
It always happens that when we are lucky we do not realise our good fortune nearly as keenly as we realise our bad fortune when we are unlucky. People in the Land Army or in any other walk of life who get free board and lodging or free lodging without board' are lucky, but it would be impossible to deal with the anomaly by putting everybody who has to pay for board and lodging in the same Income Tax position as the people who get board and lodging free. It may be true to say that some of the Service allowances are treated somewhat more


generously than corresponding allowances in civilian life, but nobody would want to alter that position in the middle of the war. My right hon. Friend has stated that when peace comes and the problem is considered again, it can be considered in the light of the position of those who, in the future, may be in the Services, and it may well be found that elasticity has been carried a little further than is fair, having regard to other members of the community.

Earl Winterton: I do not want to detain the Committee and I do not want an answer from the Attorney-General or from the Chancellor of the Exchequer to the question I have in mind. [An HON. MEMBER: "Then why ask it?"] Because it is desirable to call attention to the matter. The Attorney-General referred to other matters analogous to those arising under the proposed new Clause. Surely, in the future unless the Treasury devise some system in respect of this matter and of the analogous situation, a rather serious sense of injustice may be created. It does not seem to be a sufficient answer to say that this is the line the Treasury have always taken, because it is only within the last two or three years that this mass of wage-earners has come within this category. I imagine that after the war, whether the present basis of Income Tax is continued or not, some system will have to be found of differentiating between those who get the great benefit of living in and those outside, who receive the same wages. Otherwise, a sense of injustice will be created in the minds of the taxpayers.

Mr. Stephen: The real remedy lies in restoring the position which existed with regard to Income Tax before there was this great extension of Income Tax payment. Among the Services, the girls in the Land Army have all along been treated as the Cinderellas and I suggest to the Treasury that, in the future, a sound way to deal with the anomaly will be to restore a much more generous exemption level.

Mr. Brooke: The Noble Lord is quite right. The anomaly, which the Attorney-General admitted, has become much more acute owing to the great rise in the level of Income Tax. I will not press the matter further on this narrow issue of the

Women's Land Army now, so I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Reduction of customs duties on tea.)

The duties of customs chargeable on tea under Section one of the Finance Act, 1936, as amended by Section five of the Finance Act, 1938, shall be at the following reduced rates, that is to say:




d.


Tea not being an Empire product
the lb.
7


Tea being an Empire product
the lb.
5


[Mr. Brooke.]

Brought up, and read the First time.

Mr. Brooke: I beg to move, "That the Clause be read a Second time."
Nobody would be more surprised than myself if the Chancellor were to accept this new Clause. Nor do I ask that there shall be any long discussion on it. I have moved it to call attention to the fact that apparently we are simultaneously taxing tea and subsidising it. The Tea Duty, like the tax on sugar, is an ancient Revenue duty which definitely raises the price of the commodity by the amount of the tax. Now, in wartime, the attitude of the Government has changed right round, and it subsidises various commodities in order to keep down the cost of living, Parliament previously having taxed them knowing that it would put up the cost of living. The Parliamentary Secretary to the Ministry of Food said in the House on 13th May that tea was one of the commodities that were subsidised. I therefore put down this new Clause in the hope of eliciting a statement of policy from the Government. It seems to me wrong that we should, in this House, fix a tax on a commodity at a certain level and that then the Government, without coming to this House or necessarily telling the House about it, grant what is in fact a rebate from that tax by a war-time subsidy from the Ministry of Food. I would far prefer that that was done in an entirely open way, by the Chancellor proposing to the Committee that there should be a reduction in the tax. If he says that he is anxious to safeguard his position and his taxation strength for after the war, then I express my personal opinion that this kind of tax is an obsolete kind which we ought to try to get rid of.

Mr. Assheton: I am glad my hon. Friend does not expect the Chancellor to accept this proposed new Clause, but I think he is under a misapprehension as to the position of tea at the present time. As a matter of fact, since January last tea has not been subsidised; nevertheless I will answer his point, because it might well be that some other time the position might arise. I should like to make it clear that in the case of tea there are two reasons for maintaining the tax. One is that there is a preference, and the Government are not free, to go the whole hog and remove that tax so long as the guaranteed preference is given to Empire products.

Mr. Brooke: A preference which my new Clause would retain.

Mr. Assheton: I quite agree. The second thing is that the tax is a permanent part of our financial structure, and there have only been about two or three years during the last 300 years when tea has not been taxed. It is a permanent tax, and although my hon. Friend expressed the view that it is not his idea of a good tax it is part of our age-old system of taxation, and this is not the time, therefore, to withdraw it.

Mr. George Griffiths: I am sorry that the Mover of this proposed new Clause for the reduction of the Tea Duty moved it, and then said, "For heaven's sake do not take any notice of what I say, because I do not mean a word of what I am going to say. "That is really the essence of the speech of the hon. Member for Lewisham (Mr. Brooke).

Mr. Brooke: I said that I considered that the Tea Tax was in essence a bad tax, but that I did not believe the Chancellor could accept my suggestion to-day to reduce it to-morrow.

Mr. Griffiths: The essence of what the hon. Member said is what I have just said to the Committee. The Financial Secretary said that this tax is 300 years old, but because there has been a tax for 300 years that is not to say we cannot find the money from some other source instead of a tax on tea. I want to say just one word, because I am thinking about the old age pensioners and about the widows who after next Wednesday, unless there is a change from the Treasury

as well as from the Minister of Health and the Minister of Labour, will still be at the level of 10s., the widows who have never had a penny-piece rise since the war. I saw one last week who has 10s. for herself and 5s. for a child. She has been a widow for 10 years. She has been out charing this week. I want to get this point over. It is no fairy tale that there are old age pensioners who after they have had their tea and stewed their tea—I do not know whether any of you chaps have ever had stewed tea or not——

Sir K. Wood: I had some to-day in the smoke room.

Mr. Griffiths: I was going to say they not only have it stewed, but after it has been stewed they take it out of the teapot and dry it again because they have not got the finance. If the tax was reduced to what the hon. Member for Lewisham is asking for, but does not expect, that would be an increase of income, in a sense, to the old age pensioners. I am sorry that the Financial Secretary is harping on 300 years, and that because the tax has been there it has got to go on. Because things were done in the Garden of Eden when Adam and Eve broke the law, that is not to say that these have to be continued all the time. I am sorry that the Treasury is so hard-hearted on this matter.

Mr. Brooke: I think I have made my position quite clear to everybody except the hon. Member for Hemsworth (Mr. G. Griffiths), and I beg to ask leave to withdraw the Clause.

Motion and Clause, by' leave, withdrawn.

NEW CLAUSE.—(Amendment of s.46 (2) of Finance Act, 1941, as to relief from death duties.)

Subsection (2) of Section forty-six of the Finance Act, 1941, shall cease to have effect and the following Subsection shall be substituted therefor:—
(2) This Section applies to the death of any person from injuries received or disease contracted by him, whether before or after the passing of this Act, but during the period of the present emergency and within twelve months of his death, being injuries or disease caused by the operations of war or incurred whilst engaged in war work or other dillies in circumstances which, in the opinion of the Treasury, involve risks similar to those incurred in the operations of war:


Provided that this Section does not apply to deaths from such causes as are mentioned in Section thirty-eight of the Finance Act, 1924, of persons to whom that Section applies, or to deaths from such causes as are mentioned in Subsection (1) of Section sixty-four of the Finance Act, 1940, of persons to whom that Subsection applies."—[Mr. Barnes.]

Brought tip, and read the First time.

Mr. Barnes: I beg to move, "That the Clause be read a Second time."
I have had correspondence with the Chancellor on this matter, and therefore it can be narrowed down in this Debate before the Committee. Section 38 of the Finance Act, 1924, made certain provision for the remission of Death Duties for Service personnel engaged in the operations of war. If I understand the interpretation which the Treasury puts upon this, it is that as soon as the Forces are mobilised for war every one of them becomes on active service against the enemy. Of course, everyone will agree with this, by being classified on active service against the enemy, every member of the Forces is entitled to this concession. Section 64 of the Finance Act, 1940, extended this to certain sections of the Merchant Service and fishing boats and other categories, who die from causes arising from the operations of war, and Section 46 of the Finance Act, 1941, extended it to civilians who die from injuries caused by the operations of war. I want to call attention to the difference in the language dealing with these three categories. Regarding the Services, the language used is:
On active service against the enemy.
Under Section 64 of the 1940 Act dealing with classes of the Merchant Service the language is:
Causes arising from the operations of war.
And with regard to the concession to civilians the language is:
From injuries caused by the operations of war.
I wish to cite a particular case. It seems to me that here we have a problem of equity. On 7th June, 1942, an R.A.F. plane met with an accident, and the personnel of that plane were kilted. There were R.A.F. and civilian personnel in the plane. The coroner's verdict was very clear: "Death due to multiple injuries to Royal Air Force personnel on duty, and civilian personnel, as authorised

passengers in the aeroplane, were also on duty." The estate of a high ranking officer in the R.A.F. who meets with an accident while flying in this country for any purpose, is exempt from Estate Duties. The estate of a high technical research civilian engaged on Government war work, who is refused permission to join the Services and is killed while flying on experimental duties with the officer referred to, is not exempt. The estate of a civilian not engaged on war work, who is accidentally killed by a plane returning from active operations against the enemy, is exempt from Estate Duties, while the estate of a civilian killed by a training plane is not exempt. In view of the time, I do not propose to argue the case at length. I think I have put the issue very clearly. The whole matter is one of interpretation. In each category it rests with the Treasury to decide whether the death arises from the operations of war, and, in so far as I have examined them, I fail to find how the Treasury excludes any of these cases.

Sir K. Wood: I am indebted to my hon. Friend for dealing so briefly with the matter. We have had some correspondence about it, and I have endeavoured to give him some reasons for the conclusions which have been reached as to the payment of certain claims. It is true that when we reach conclusions we have to look at the provisions of the Act of Parliament. It is true that there is a differentiation between people in the Forces and civilians, as laid down by the Act. My hon. Friend is seeking to repeal Section 46, which relates to civilian deaths, and which is applied in the case of injuries caused by the operations of war. My hon. Friend desires, at any rate for the purposes of the discussion to-day, first, to include disease so far as civilians are concerned, and then—I know that this phraseology is very difficult to draft, but it would be more difficult to interpret—
disease caused by the operations of war or incurred whilst engaged in war work or other duties in circumstances which, in the opinion of the Treasury, involve risks similar to those incurred in the operations of war.
There is this distinction in regard to disease. Members of the Forces are subject to a medical examination before they are taken into the Forces, and so we are able to come to some measure of reasonable conclusions as to whether——

Mr. McNeil: Not very reasonable conclusions.

Sir K. Wood: I hope that my conclusions would be reasonable. I am not referring to the decisions of medical boards or anything like that. It gives some measure of guidance as to whether the disease from which a man may die arose out of war service. But I will not provoke a discussion on whether all the decisions are advisable or not. It would be impossible, in relation to the millions of civilians, to reach a conclusion of that kind at all as they have not undergone any medical examination. I am afraid that my hon. Friend's suggestion that the Treasury should endeavour to come to a conclusion on whether the disease was caused while the person was
engaged in war work or other duties in circumstances which, in the opinion of the Treasury, involve risks similar to those incurred in the operations of war,
would be extremely difficult to carry out in practice. In the course of my correspondence with my hon. Friend, cases like this arose. You might have a scientist engaged in an experimental flight, on which he meets his death. Under the Clause, it would be for the Treasury to decide whether death was the result of the war or not. In a large number of cases, death might have happened in just the same way in peace-time. It would be difficult to say that it arose out of the war. All sorts of difficulties might arise. I have dealt briefly with this matter, but I hope my hon. Friend will not think that I do appreciate his argument because I have not replied at great length. I shall he glad to talk further with him about this subject. But the Clause would be very difficult to operate.

Mr. Barnes: I appreciate the difficulty of framing an adequate Clause without the proper technical advice. In view of the Chancellor's intimation that he will give me facilities for again looking into the matter, I beg to ask leave to withdraw the Clause.

Motion, and Clause, by leave, withdrawn.

NEW CLAUSE.—(Exemption of certain voluntary superannuation funds.)

Sub-section (2) of Section thirty-one of the Finance Act, 1933 (which repeals Sub-section (4) of Section thirty-nine of the Income Tax Act, 1918), shall cease to have effect in so far as the said Section thirty-nine applies to a

voluntary superannuation fund registered as a society under the Industrial and Provident Societies Act, 1893, and the said Sub-section (4) of Section thirty-nine of the Income Tax Act, 1918, shall have effect accordingly.—(Mr. McNeil.)

Brought up, and read the First time.

Mr. McNeil: I beg to move, "That the Clause be read a Second time."
I shall try to telescope my argument as much as possible, because I do not want to detain the Committee. The basic purpose of this Clause is that the voluntary superannuation fund of the National Union of Journalists should have its position so eased as to be able to continue, and, in conformity with the usual practice of this House, I had better say that I am a member of that union, although I have no financial interest at all in the fund. I think that the argument for the Clause is fairly strong. I hope that the Chancellor will think so, too. At any rate, if he agrees that the purpose of Section 31 of the 1933 Act, like that of any other financial provision, is to enable him to collect certain moneys, to do that in an orderly fashion, and to collect it justly, I think I shall be able to show him that if he resists this Clause he will get no money by his resistance, and that he will perpetuate hazardous and fortuitous circumstances and bring injustice, at any rate to a small section of this community. This fund was founded in 1925. It differed from the ordinary superannuation fund in that it was not a joint fund, to which employers and employees contributed, because the union had found it impossible to secure the agreement of the employers.
The editorial side of the newspaper industry is a curious one. There is a considerable section of the industry which comprises free lance journalists, that is to say, those who have no salary attachment to any one employer but are paid by results, and that is the basic reason why a joint fund was impossible. To overcome this difficulty, in 1925, this fund was promoted by the Union under the Industrial and Provident Societies Act, as the law required, and thus secured the exemption from taxation of its investment funds under the appropriate Section of the 1918 Act. But in 1933, under the Finance Act of that year, this fund was compelled to pay taxation. At that time, the Union, having failed to sustain its appeals, tried to set its domes-


tic finances in order within the fund, and because the taxation level was only 5s. they were able to reduce their contracting benefits and carry on for a time. But as the taxation level increased, so the difficulties became greater, until—and this is the reason why my hon. and right hon. Friends and myself raise the matter—the fund has had for the last two years to cease recruiting members. Indeed, unless the Chancellor can agree, the fund will have to close down altogether. It must be wound up. That is why I say that, even if the Chancellor resists this new Clause, he cannot secure any moneys from the fund.
It would be bad enough if the Chancellor, in pursuing a deliberate policy, felt that he had so to treat this fund. I hope that I shall be able to persuade him that it is a fortuitous circumstance and that it was never intended that this fund should so be treated. Under Section 31, Subsection (2) of the 1933 Act, the position of this fund changed and it is that portion of this Sub-section that we by this Clause seek to repeal. I could quote at some length to prove that that Sub-section was never intended to deal with this fund. When the then Chancellor of the Exchequer—the late Mr. Chamberlain—introduced this Sub-section, which was the most controversial Sub-section dealing with the undistributed profits of the co-operative societies, he said that they expressed their agreement with the majority of the Royal Commission which reported in 1920 that the amounts arising from trading with members, the so-called mutual trading, should be made chargeable to Income Tax. He went on to say that he anticipated in that year that by this Sub-section he would gain £1,200,000, all of which he calculated would be got exclusively from the co-operative societies. The then Financial Secretary to the Treasury, in piloting this Sub-section through on 31st May, 1933, made the same assumption throughout his speech. He said that there would be no distinction whatever between the co-operative society and the ordinary trader, and he went on to talk about traders and cooperative societies. Plainly, any one who cares could satisfy himself that this Subsection dealt only, and was intended to deal only, with the co-operative societies.
If there is any doubt in the minds of the Committee I would push it aside by

saying that the Financial Secretary who made that speech and who piloted that Sub-section through is by coincidence one of the signatories to the Clause which I have moved. He is my right hon. Friend the Member for Devonport (Mr. Hore-Belisha) and he authorises me to say that he regrets he cannot be here and that he is firm and clear in his mind that at no time in these discussions was it ever intended or imagined that this voluntary superannuation fund, for which we presently plead, would be caught up by that Sub-section. So that, as I say, not only will the right hon. Gentleman get no additional funds, but he will be caught up by an accidental turn of his own wheel, and I think I can demonstrate too that he will be perpetuating an injustice. We are really talking about men and not a fund.
Recently the hon. Member for Gorbals (Mr. Buchanan) said in this House that what he called the decencies of life were the concern of democracy. So here we are talking about men who, previously, were excluded from a joint fund because if they had been members of a joint fund, then under the appropriate Section of the 1931 Act, they would have been exempt from this taxation. But because they had no joint contribution, they voluntarily made provision for their reetirement, and the Chancellor, in effect, says, "As you are having to carry one burden, I am going to ask you to carry three burdens." These men must first pay the tax on their own earnings; from their own earnings they have to make a sufficient contribution to ensure a reasonable standard of retirement, and now, they have also to meet this taxation. In 1933 the fund was solvent. It had a balance of £1,077; to-day it has a deficit of £22,720. Naturally my hon. Friends and I are not tied to the actual wording of our Clause. I think I can, with perfect justice, ask the Chancellor to make it possible for this fund to continue. At any rate, if he cannot see his way to do that, I plead with him to devise some amendment so that the bargain which the officials of this Union made with these ordinary, law-abiding, hard-working citizens who have tied themselves to certain contributions in return for certain benefits and who are, many of them, now near retirement, can be kept.

Mr. Woodburn: I want to reinforce what my hon. Friend the Member for Greenock (Mr. McNeil) has said. I am not a member of the National Union of Journalists, although I have some association with the profession, and some of my friends in the Northern part of the country have asked me specially to support this plea. I think the main point is a simple and human one. Men were encouraged by the State to enter into these superannuation arrangements, and in every other profession except this it has been possible to enter into this operation in co-operation with employers. But in the chance circumstances of this profession men have not been able to do so, and they are now reaching an age when they cannot enter into new contracts, because they are long past that stage. The circumstances are rather tragic. The men who have made provision for their old age are now approaching what will be a very uncertain future, not because of any fault of theirs, but because of the freakish application of one particular taxation Clause. If this was applied to all mutual assurance of this kind, one could understand it, but when it is not it seems to be unfair. We do not expect the wording of this Clause to be accepted, because it is rather difficult when one is not a Parliamentary draftsman, but I hope the Chancellor will give it favourable consideration.

Sir K. Wood: I would like to congratulate the hon. Member for Greenock (Mr. McNeil) on the excellent way in which he moved this new Clause. I cannot hold out any hopes of agreeing to the proposal on the Order Paper, which, as hon. Members will appreciate, would make a permanent alteration in the law, but between now and the Report stage I will enter into negotiations with those who are interested to examine the latter part of the proposal made by the hon. Member. I realise from what he said that there are people who are interested in this fund—indeed, I know some of them—and I would be the last to do anything harmful to them if it could be avoided. However, as I have said, I and my advisers will consult with those interested to see whether it is possible to do something in the way proposed by the hon. Member in the latter part of his speech.

Mr. Bellenger: The Chancellor has met my hon. Friend the Mem

ber for Greenock (Mr. McNeil) very fairly in the circumstances, but I would like to impress upon him the fact that several of us wanted to put our points of view before him on this matter, but have refrained from doing so in view of the late hour. I hope he will keep this in mind.

Sir K. Wood: Certainly.

Mr. McNeil: On the Chancellor's assurance of sympathetic consideration I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment as to allow ance for repairs.)

Section twenty-eight of the Finance Act, 1923 (which relates to the allowance for pairs and which was continued in force by Section twenty-seven of the Finance Act, 1942, until the fifth day of April, nineteen hundred and forty-seven) shall have effect as if in Sub-section (2) of the said Section twenty-eight for the words "one-fourth," "one-fifth," "twenty pounds" and "one-sixth." there were substituted respectively the words "one-third," "one-fourth," "twenty-five pounds," and "one-fifth."—[Mr. Bellenger.]

Brought up, and read the First time.

Mr. Bellenger: I beg to move, "That the Clause be read a second time."
The point I wish to put to the Chancellor and the Committee on this Amendment is a substantial one, and although I do not propose to take up a lot of time in elaborating it my argument, briefly, is this: The Chancellor knows that in arriving at the net assessable value of house property and, indeed, all properties under Schedule A tax, the statutory allowance for repairs is deducted from the gross value to arrive at the net annual value for Schedule A tax. That statutory allowance was fixed many years ago—I think it first appeared in the 1923 Act—and it varied according to the value of the property fixed by the tax assessors each year. In the case of small properties under a value of £40 per annum the allowance is one quarter, or £10 per annum. I think even the Chancellor himself, although he may live in a house which is assessed at more than £40 per annum, will agree that it is impossible, and will be impossible for many years after the war, to carry out properly repairs to houses of that kind by an expenditure of £10 each year. If one takes the type of house which I imagine


the Chancellor lives in—a house of £100 a year or over assessable value—the allowance for repairs is higher. It is £20 if it has an assessable value of £100, and it is one-sixth for anything over £100. That case is even worse. The bigger the property the less adequate becomes the allowance for repairs. It may be said that this difficulty may be overcome by the alternative which is open to taxpayers to take a five years' average so that the Commissioners can accept that as the actual cost of repairs spread over that five years. But I think this is a difficult and cumbrous operation of the Schedule A tax and, moreover, small taxpayers have a long time to wait.
I believe that those who pay Schedule A tax can actually submit to the tax inspector the cost of repairs year by year, but even that is not quite adequate, because during the war owners of property are not permitted to carry out repairs, because they cannot get materials and labour. So, repairs are accruing, and at the end of the war there will be a heavy bill. The allowance which the Chancellor makes under the Finance Act is inadequate. I hope the right hon. Gentleman realises the force of the point I am putting to him and will be prepared to deal with my Clause in the same way as he dealt with the preceding one. This is a matter which is agitating the minds of house property owners all over the country; we ought to bring our Finance Acts up to date and keep them modern. The statutory allowance for repairs is totally inadequate, and on the grounds of equity to the taxpayer and on the ground of encouraging house owners to keep their property in good repair, we ought to grant a proper allowance.

The Attorney-General: Taxpayers who are affected by these provisions of the Income Tax Acts are in a favourable position, which, perhaps, cannot be said of all taxpayers. They are in a favoured position for this reason. There is a scale laid down which is deducted from the annual value, whether any repairs are carried out or not. A person may have a new house to which no repairs are necessary for some time, but still get an allowance accruing according to the annual value of the house. On the other hand, if you live in a house which needs repairs over and above this scale, if you take the trouble

to keep a record of the money you spend on repairs, you can claim on the actual money that you spend. It would be difficult to see how you could have fairer or more generous provision than that, an automatic scale applied whether you do repairs or not, the actual repairs, taken over an average, I agree, as they must necessarily be, if you think the scale does not meet your case. Therefore my right hon. Friend does not feel that this is a matter which he should undertake to look into further or deal with now.
As the hon. Member said, at the moment one cannot spend anything on repairs, and surely it cannot be the right time to put up the automatic allowance when it is more or less conceded that no one will be able to spend that amount of money. When we get into the times when repairs can be done and the house situation gets more normal, it may well be that the cost of repairs will be found to have gone up, but it may also be that annual values will have gone up too, and they may have gone up to an extent which makes the existing proportion a reasonable one. The only circumstances in which it would be right to reconsider these automatic deductions would be not so much in the interests of taxpayers but in the interest of saving everyone trouble. If it can be shown that, taking the country as a whole, these proportions have fallen, having regard to the various alterations in cost of repairs and annual values, below the general average cost, there would be a case for putting them up. At present there is not and there could not be, because repairs cannot be done. I agree, to this extent only, that these proportions ought to represent the general average of repairs over the whole country. Until it can be shown that they have got out of step with that general average my right hon. Friend does not think it would be right to alter them, and, if anyone is spending more, he has only to take the trouble to keep a record of what he spends and he gets it allowed as a deduction.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Amendment of Retail Licence Duties.)

Section thirteen of the Finance Act, 1942, shall be amended by the substitution of the words "twenty-five per cent." for the words "five per cent." and by the substitution of the


words "any licensed retailer's on or off licence" for the words "a publican's licence."—[Mr. Boothby.]

Brought up, and read the First time.

Mr. Boothby: I beg to move, "That the Clause be read a Second time."
Having started the day with clergymen, it is perhaps appropriate that I should conclude it with publicans. Last year's Finance Act allowed a rebate of 5 per cent. on publicans' licences only in respect of diminution in supplies of wines and spirts. This was felt in the trade to be inadequate, but no very strong protests were made because the conditions prior to last year were not so bad in view of the existence in most cases of considerable surplus stocks. But it was felt that any concession should also apply to the off-retailer, and the off-retailer in Scotland includes the licensed grocer, who is rather an important factor in this connection. The surplus stocks which enabled the retail licence trade to carry on are now completely exhausted, and at present the proportion of spirits allocated to retailers on their former supplies is not usually more than about 5o per cent, of what they used to get, and on wines only about 3 per cent. So there is an immense reduction in their turnover. In the Finance Act, 1917, Section 7, holders of Excise liquor licences were granted a rebate of three-quarters of the payment in compensation for diminution of supplies of spirits and wines which they received. The diminution is certainly not less in this war. It was recognised by this rebate in the last war that retailers should not be asked to continue to pay an amount of duty out of all proportion to the volume of the trade they were doing. All that I am seeking is to persuade the Government that retailers are now being asked to pay a licence duty out of all proportion to the amount of trade that they can possibly do in view of the supplies of spirits and wines that they are receiving. My Clause seeks a reduction of 25 per cent, in the licence duty, as it were by way of compensation for the reduced turnover, and it is applicable to both on and off holders of retail licences, because it is not fair to discriminate between the two.

Mr. Assheton: My hon. Friend has certainly covered a very wide field to-day in the attention that he gave to the claims of the clergy and, no doubt just as important, the attention that he is giving to

the claims of publicans and those who sell retail wines and spirits. In the Finance Act of last year there were two Sections dealing with this problem, Section 13, which dealt with the reduction of duty on publicans' licences in respect of diminution in supplies of wines and spirits, and Section 14, "Relief from duty where trade diminished by war circumstances." I am not quite clear whether he appreciates the effect of the latter Section. It provides Licence Duty relief in view of the shortage of supplies and, except as far as the publican's licence is concerned, the relief is based on the trade done in each separate liquor and applies to each separate licence. The amount of the relief is two-thirds of the amount of the diminution in trade. I am not sure whether I understood him aright. Was he suggesting that it should be three-quarters instead of two-thirds?

Mr. Boothby: Yes.

Mr. Assheton: If that is the suggestion, I am sorry to say that my right hon. Friend cannot accept it.

Mr. Boothby: In view of my hon. Friend's categorical statement, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

Schedules r to 6 agreed to.

SEVENTH SCHEDULE.—(Application of Income Tax Provisions to Excess Profits Tax and the National Defence Contribution.)

Sir G. Schuster: I beg to move, in page 29, line 13, at the end, to insert:
140.—(1) A person who has delivered a return or particulars which he has been required under the enactments relating to excess profits tax or the national defence contribution to deliver or furnish and discovers any omission or wrong statement therein, may deliver an additional return or additional particulars rectifying the same, and shall not thereafter be liable to any proceeding by reason of his omission or wrong statement.
(2) A person who has not delivered such a return or such particulars within the time limited may deliver it or them at any time before proceedings for recovery of a penalty, incurred in respect of such non-delivery, have been commented, and thereafter no such proceedings shall be taken.
The Seventh Schedule makes applicable to Excess Profits Tax and National Defence Contribution the penalties for


failure to deliver true and correct Income Tax returns which were imposed by Section 107 of the Income Tax Act, 1918. That Act also contained a relieving Section, Section 140, which empowers the taxpayer to amend his return on discovery by him of any omission or wrong statement, and it goes on to enact that the taxpayer shall not thereafter be liable to any proceedings by reason of his omission or wrong statement. It is obviously right and proper that the penalties imposed under Section 107 with regard to false Income Tax returns should be imposed for false returns for Excess Profits Tax and National Defence Contribution, but I think that my right hon. Friend will be ready to admit that as a matter of equity the corresponding relieving provisions of Section 140 should also be applied.

Sir K. Wood: I think that my hon. Friend has put forward a reasonable case. As we have incorporated the major part of the Section, it is fair that what is called the relieving Section should be applied in these cases. In accepting the Amendment, I do not want the matter to be misunderstood by anybody. If anybody is guilty of fraud and sends in a corrected statement afterwards, it will not get him out of his trouble. With that clear understanding I see no reason why this protection should not be equally applicable in these cases as it was in the other. Therefore I accept the Amendment and congratulate my hon. Friend on getting the Amendment into the Bill.

Amendment agreed to.

Schedule, as amended, agreed to.

Eighth Schedule agreed to.

Bill reported, with an Amendment; as amended, to be considered upon the next Sitting Day.

PURCHASE TAX (EXEMPTIONS) (BATTERIES)

Resolved,
That the Purchase Tax (Exemptions) (No. 2) Order, 1943, dated 6th May, 1943, made by the Treasury under Section 20 of the Finance (No. 2) Act, 1940, a copy of which was presented to this House on 13th May, be approved."—[Mr. Assheton.]

TELEGRAPH BILL

Considered in Committee; reported, without Amendment; read the Third time, and passed.

SUNDAY CINEMATOGRAPH ENTERTAINMENTS

Resolved,
That the Order made by the Secretary of State for the Home Department extending Section I of the Sunday Entertainments Act, 1932, to the Townships of Ormskirk and Burscough in the Urban District of Ormskirk, a copy of which was presented to this House on 1st June, be approved."—[Major Sir James Edmondson.]

The remaining Orders were read, and Postponed.

It being after the Hour appointed for the Adjournment of the House, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.